Ann Arbor (Mich.) Employees’ Retirement System invested a total of $7.2 million in two hedge funds as part of the pension fund’s continued restructuring to a directly invested portfolio from a hedge funds-of-funds portfolio.
Trustees of the $459 million pension fund awarded $6 million to Tse Capital Management for investment in its global macro hedge fund strategy and $1.2 million to Standard Pacific Capital for investment in its long/short equity strategy, minutes from the Oct. 16 board meeting showed.
As of Sept. 30, the pension fund had a 5%, or $21.5 million, allocation to hedge funds of funds, with $9.8 million invested in BlackRock Multi Manager Partners (Offshore) fund; $5.8 million invested in Optima Fund; and $5.9 million invested in Orion Managed Futures Fund, a Sept. 30 performance report showed.
Trustees gave the pension fund’s consultant, Meketa Investment Group, discretion to “work with staff and legal counsel to draw down the Optima and Orion mandates and eventually terminate them for timely funding of the newly approved mandates,” the October meeting minutes showed.
Additionally, the minutes showed that “BlackRock has been notified of their termination and redemption (was) requested,” and indicated that 90% of the money invested in the BlackRock hedge fund of funds is expected to be returned at the end of January or in early February.
Nancy R. Walker, the pension fund’s executive director, was not immediately available to answer questions about the hedge fund portfolio changes.
The most recent performance report showed that net of fees, the city pension fund’s returns topped those of its policy benchmark in every reporting period ended Sept. 30: three months, -1% (benchmark, -1.1%); one year, 9.3% (benchmark, 9.1%); three years, 12.8% (benchmark, 12.5%); five years, 9.9% (benchmark, 9.6%); and 10 years, 6.7% (benchmark return not available).
Multiyear returns are annualized.