Colorado Fire & Police Pension Association, Greenwood Village, invested $34.5 million in a long/short equity hedge strategy managed by Coatue Management, confirmed Dan Slack, CEO of the $3 billion pension plan.
Coatue is the first hiring in the pension fund's new hedge fund program within its $1.5 billion global equity portfolio, Mr. Slack said. The system already has hedge fund investments in a separate 11% absolute-return allocation.
Mr. Slack said the association recently allocated 20%, or $300 million, from the global equity portfolio for different hedge fund strategies, in addition to current active and passive long-only equity investments.
Funding will come from reducing long-only equity investments within the global equity allocation. No terminations are expected.
Mr. Slack anticipates hiring about 10 hedge fund managers throughout 2012, with each mandate around $30 million. All hires will come from internal searches; no RFPs are planned. Pension Consulting Alliance, the fund's general investment consultant, is assisting.
The association is seeking three substrategies in hedge funds — traditional long/short, event-driven and activist managers. Mr. Slack said the new allocation is to reduce beta to the S&P 500 index and reduce the maximum drawdown in a down market.
“Basically, it's to protect against the downside of a market,” Mr. Slack said in a telephone interview.
