Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. DEFINED BENEFIT
February 11, 2015 12:00 AM

San Francisco City & County moving 5% to hedge funds

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    San Francisco City & County Employees’ Retirement System approved a plan Wednesday night to begin investing in hedge funds.

    The 5% allocation to hedge funds — $1 billion of the $20 billion pension fund’s assets — is a scaled-down version of Chief Investment Officer William Coaker Jr.’s proposal to invest $3 billion in hedge funds, or 15% of assets.

    Mr. Coaker scrapped that plan last week in the face of strong objections from board members who thought it was too risky and revised his proposal, recommending a 10% allocation.

    But Mr. Coaker also said he could accept a 5% allocation, a number proposed by Board President Victor Makras as a compromise in December.

    The new asset allocation plan would also increase private equity to 18% from 16% and real assets to 17% from 12%. Global equity will be reduced to 40% from 47%, and fixed income to 20% from 25%.

    Dozens of current and former San Francisco employees denounced the plan, saying that board members were putting their pension benefits at risk. Mr. Coaker said the opposite was true, that he was trying to reduce the volatility of the pension fund’s returns in the event of a downturn. He said the pension plan’s funded status had fallen by more than half in the financial crisis because of the retirement system’s concentration in growth assets such as equities. The funding level was 72% in 2009 vs. 178% in 2000. Mr. Coaker said the funded status was 93% as of June 30.

    The 5% hedge fund allocation reduces the pension fund’s volatility only slightly, Mr. Coaker told the board, saying 10% would make a more significant impact. Mr. Makras said the board wanted to start small and could approve increases to the hedge fund program to the 10% allocation if everything went smoothly after a year or so.

    Mr. Coaker came under intense questioning from board members who echoed comments from the audience, asking how transparent hedge fund investments would be. “We don't want a Bernie Madoff hedge fund,” said Wendy Paskin-Jordan, a board member.

    One board member voted against the plan. Herb Meiberger has been staunch in his opposition. He said Wednesday that hedge fund transparency would be difficult to obtain and repeatedly questioned Mr. Coaker on whether hedge fund managers would reimburse the pension fund for any losses. Mr. Coaker said there would not be direct reimbursement, but managers would not take any profit on future investment returns until recovering from initial losses.

    Mr. Coaker said only hedge funds with strong transparency will be hired.

    Wednesday’s vote had been closely watched by many, coming in light of the decision in September by the $295.7 billion California Public Employees’ Retirement System, Sacramento, to abandon its hedge fund program.

    Mr. Coaker said he had talked to CalPERS Chief Investment Officer Theodore Eliopoulos, who said he was not opposed to hedge funds. He said the CalPERS situation was different from San Francisco’s, noting officials at the nation’s largest defined benefit system felt it was too difficult to scale the program to the size needed to make a significant contribution to returns.

    Mr. Coaker said investment staff will issue a request for proposals next month to hire a hedge fund consultant and will also start recruiting an in-house hedge fund staff. He said the program could start in late 2015 or early 2016.

    Mr. Coaker said he favored direct hedge fund investments over funds of funds, noting returns have been better and the pension fund would have direct control of managers.

    Related Articles
    CalPERS is largest investor to exit hedge funds, but decision isn't a surprise …
    Too complex for CalPERS
    San Francisco likely to stay out of HF deep end
    San Francisco City & County dials back proposed hedge fund allocation to 5%
    San Francisco earmarks $150 million for Blackstone fund
    San Francisco City & County launches hedge fund consultant, fund-of-funds search
    San Francisco City & County commits $50 million to Blackstone fund
    San Francisco City & County sets $50 million for real estate fund
    San Francisco commits up to $277 million, names finalists in hedge fund search
    Recommended for You
    Liability-driven investing leads to full funding
    R.I. treasurer seeks transparency laws for church plans
    R.I. treasurer seeks transparency laws for church plans
    Public pension funds adopt cost-sharing mechanisms to stem volatility
    Public pension funds adopt cost-sharing mechanisms to stem volatility
    A Good Time for Trend Following
    Sponsored Content: A Good Time for Trend Following

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit