Massachusetts Pension Reserves Investment Management Board on Friday added Steadfast Capital Management to its lineup of hedge fund firms in which the $48.8 billion pension fund invests directly.
The board, which oversees the state’s $48.8 billion Pension Reserves Investment Trust fund, approved an initial $50 million allocation to Steadfast, an equity long/short hedge fund firm.
Funding will come via a transfer of assets that Steadfast Capital is already overseeing in its capacity as part of the manager lineup of hedge fund-of-funds firms K2 Advisors and Grosvenor Capital Management. The two were among four hedge fund-of-funds providers the board in April voted to terminate in favor of direct investments in hedge fund firms.
PRIM’s fifth hedge fund-of-funds provider, Pacific Alternative Asset Management Co., will continue to manage about $750 million for the pension fund, or 15% of the pension fund’s nearly $5 billion hedge fund allocation. The more than 20 hedge fund firms the board has selected since late 2011 will manage the remaining 85%.
At Friday’s meeting, PRIM’s consultants from Callannoted that at last count roughly 55% of PRIM’s hedge fund allocation is being invested directly by those 21 providers, with another 30% still to be liquidated from the system’s remaining fund of funds allocations.
Separately, PRIT fund assets for the fiscal year ended June 30 was down a marginal 0.08% from the year before, following a 23.2% surge the prior fiscal year before and a 12.8% advance for the year ended June 30, 2010.
At Friday’s meeting, Michael Trotsky, PRIM’s executive director, said protecting PRIT’s assets in a difficult market year is more important than posting gains in an easier environment and expressed pride that the PRIT fund was able to avoid losses from the volatility of the past 12 months.
He said asset allocation changes the board approved last year, including a four-percentage-point cut to PRIM’s international equity allocation, which helped soften the blow resulting from the sharp decline in European stock prices over the past year.
Being able to deliver $2.6 billion in value added over the past three years, on an underfunded status of $20 billion for the state fund, amounts to “great progress,” Mr. Trotsky said.