City of Milwaukee Employes' Retirement System authorized a search for a hedge fund-of-funds manager to run $100 million, its first allocation to hedge funds, said David M. Silber, chief investment officer.
Callan Associates, the pension fund's investment consultant, plans to recommend a shortlist of managers for the $5 billion CMERS, Mr. Silber said.
Managers interested in being considered for inclusion in the search may contact Callan and complete a questionnaire, Mr. Silber said. Information is available on Callan's website.
CMERS is not issuing an RFP, Mr. Silber said.
The pension fund plans to hire one manager, either a manager of a pooled hedge fund of funds or a manager that would put together a customized hedge fund of funds, Mr. Silber said. “We want diversified exposure that has a low correlation to public equities.”
Funding will come from domestic equities, Mr. Silber said, adding CMERS hasn't yet identified specific managers.
Callan could present recommendations of managers as early as the June 23 board meeting, Mr. Silber said.
The search is designed to complete CMERS' move to a 5% allocation to absolute-return strategies, adopted to better diversify the pension fund's sources of return and risk, Mr. Silber said.
For the other part of the allocation, CMERS expects to hire two managers to run from $50 million to $75 million each from a list of finalists in a search initiated last December, Mr. Silber said. The finalists are Allianz Global Investors, BlackRock, GMO, Morgan Stanley Investment Management, Newton Capital Management and Standard Life Investments.
When negotiations currently underway with two of the finalists are completed, CMERS plans to identify the winners, Mr. Silber said. There is no time frame for completion.