San Diego City Employees' Retirement System committed $120 million to Grosvenor Capital Management for a credit fund-of-funds strategy, according to a video recording of the board meeting and meeting materials posted on the $6.4 billion pension fund's website.
The board at its March 14 also committed $50 million to Carlyle Group's seventh real estate fund, Carlyle Realty Partners VII, and $20 million to real estate manager CBRE Global Investors' seventh non-core fund, CBRE Strategic Partners U.S. Value 7.
Carlyle is seeking to raise its largest-ever real estate fund with a more than $3 billion target and no hard cap on the amount it could ultimately raise. Carlyle expects the fund to invest in U.S. real estate, focusing on individual properties rather than portfolios of real estate. This is the pension fund's first commitment to a Carlyle fund.
CBRE is expected to invest in value-added real estate. The pension fund is an investor in the prior value-added fund, CBRE Strategic Partners U.S. Value 6.
Separately, the board plans to further discuss its relationship with fixed-income manager Pacific Investment Management Co. at its May 9 meeting. PIMCO, one of three fixed-income managers for the pension fund, runs about $668 million in an intermediate aggregate total return strategy, which represents 10% of the total fund assets.
In a report to San Diego's investment committee, general investment consultant Hewitt EnnisKnupp maintained its “buy” rating of the strategy and recommended taking no action.
However, at the board meeting, Richard Tartre, investment committee chairman, noted that he had some concerns about PIMCO during his investment committee report.
“I expressed some concern about the fact we have 10% of our assets with PIMCO, and with substantial organizational changes there … and pressure they may feel to continue performance, it's a bad concentration and bad psychological setup for managers at PIMCO, especially (founder and Chief Investment Officer) Bill Gross. Although he is not as old as I am, he is getting very old and there's no succession plan that is at least visible or about which they talk,” Mr. Tartre said at the board meeting.
