South Carolina Retirement System Investment Commission, Columbia, invested or committed a total of $3.7 billion in October on behalf of the $29.9 billion South Carolina Public Employee Benefit Authority.
Commissioners approved an initial investment of $400 million in Guggenheim Partners’ multicredit strategy at a meeting Thursday, said Edward N. Giobbe, the commission’s chairman, in an interview. The total mandate to the credit strategy is 3% of pension fund assets or $1.2 billion in current dollars.
Also approved Thursday was a commitment of up to $30 million in Azalea Fund IV, a private equity fund specializing in buyouts of lower middle-market companies in the southeastern U.S. and managed by Azalea Capital. Approval of the commitment stipulated that the retirement system’s investment not exceed 25% of the fund’s ultimate value, Mr. Giobbe said.
At their Oct. 2 meeting, RSIC board members approved a total of $3.3 billion in investments and commitments, according to a webcast of the meeting.
As part of a move to manage more of the pension fund’s $6.4 billion global public equity portfolio in passive strategies, commissioners approved hiring AQR Capital Management, INTECH Investment Management and D.E. Shaw Group to manage 4% of plan assets each in global equity enhanced index strategies. The initial allocation to each manager is $700 million.
State Street Global Advisors was cleared to receive $1 billion for its SSgA MSCI World index strategy.
In September 2013, the RSIC approved the move of 25% of plan assets to passively managed global equity accounts from active management. SSgA and BlackRock were selected to evenly split management of the portfolio, but prior to the Oct. 2 meeting, only BlackRock had been funded with $2 billion for investment in a passive strategy benchmarked to the MSCI World index.
For the immediate future, RSIC’s investment staff intends to split roughly half of the now-$6.4 billion allocation between the two managers, said Danny Varat, a commission spokesman, in an e-mail.
Also, KKR Lending Partners II, a direct lending fund managed by KKR & Co., received a $125 million commitment, while Brookfield Real Estate Finance IV, a U.S.-focused mezzanine debt fund, was awarded a $50 million commitment. The latter fund is managed by Brookfield Asset Management Financial Partners.
During his report to the Oct. 2 commission meeting, Hershel Harper Jr., chief investment officer, discussed the abrupt departure in late September of William H. Gross, co-founder and CIO of Pacific Investment Management Co. The retirement system has $1 billion invested in PIMCO’s core-plus fixed-income strategy.
Commissioners approved Mr. Hershel’s recommendation to “remove the plus” from the PIMCO strategy by changing the investment guidelines of the mandate to prohibit investment in high-yield securities, emerging markets debt and any other investment not appropriate for a core fixed-income fund.
“Bill Gross was very critical” to PIMCO’s investment process, Mr. Hershel told the commission, noting that “this is a significant event for PIMCO.”
In response to a question from Commissioner Allen R. Gillespie about why the commission would maintain a core fixed-income investment “when returns are so low,” Mr. Harper said the board will be looking at the fund’s global fixed-income portfolio at its Nov. 20-21 meeting.
