Los Angeles County Employees Retirement Association, Pasadena, Calif., is boosting its private equity and hedge fund allocations at the expense of global equity and fixed income, according to David Kushner, chief investment officer of the $38.6 billion pension fund.
LACERA cut global equity by 2.5 percentage points to 48.5% and fixed income by 3.5 percentage points to 22.5%. Its private equity allocation was hiked to 11% from 7%, while hedge funds was raised to 3% from 1%, Mr. Kushner said in an e-mail.
The retirement system left unchanged its allocations to real estate, 10%; commodities, 3%; and cash, 2%
The new allocation was adopted following an asset-liability study conducted by the pension fund's general investment consultant, Wilshire Associates.
LACERA already has 10.3% invested in private equity, according to a staff memo for the association's Wednesday board meeting. It is still below its former 1% hedge fund allocation with 0.7% invested.
Separately, the board committed up to $105 million to Lightyear Fund III, a private equity fund managed by Lightyear Capital, and €50 million ($61 million) to international opportunistic real estate fund Europa Fund IV, managed by Europa Capital.
The board also hired consultant Callan Associates to assist staff in reviewing its existing custody bank relationship BNY Mellon, and in preparing an RFP for global custody services. Pension fund officials had launched an RFQ in June.
Also, Delta Asset Management, which manages $237 million in domestic large-cap core equities, was terminated. Delta's parent, BMO Global Asset Management, is discontinuing the strategy, “and, in effect, Delta will cease to exist as an entity in the near future,” according to a staff memo to the board.
Upon learning this from Delta executives, investment staff asked Delta to stop trading on LACERA's account as of close of business on July 19; Delta executives remained fiduciaries and continued to monitor the account, the memo stated.
Staff hired BlackRock Transition Management to assist in distributing Delta's assets to existing managers or managers on an approved list. Details on how the assets were distributed weren't available by press time.