San Francisco City & County Employees’ Retirement System hired two fixed-income managers to run a total of $1.3 billion, said Norm Nickens, board secretary, on Thursday.
Funding will come from the termination of fixed-income managers Aberdeen Asset Management and Stone Harbor Investment Partners. Aberdeen managed about $1 billion in two strategies — Aberdeen Core Plus Fund and Aberdeen Total Return Bond Fund — and the remainder was managed by Stone Harbor.
A staff memo presented at the pension fund’s board meeting Wednesday said the investment staff has “reduced confidence in Aberdeen’s ability to deliver expected levels of excess returns going forward.”
It also questioned Aberdeen’s commitment to its fixed-income business given its acquisition of other non-fixed-income businesses over the past several years, including SVG Capital (private equity), Scottish Widows Investment Partnership (global multiasset), FLAG Capital Management (private equity) and the pending acquisition of Advance Emerging Capital (emerging and frontier markets fund-of-funds manager.)
A spokeswoman for Aberdeen could not be reached by press time for comment.
The $20.3 billion pension fund will terminate Stone Harbor Investment Partners multisector core-plus strategy because a staff memo says the strategy is not an “ideal fit” as the pension fund restructures its fixed-income portfolio to 20% from 25% of the portfolio and improves the overall credit quality of the portfolio.
In other action, the board committed up to £40 million ($60 million) to Brockton Capital Fund III.
The fund will invest in residential, office, retail and industrial properties.