Orange County Employees Retirement System, Santa Ana, Calif., launched an exploratory RFP for alternative income investment strategies managers, said Robert Kinsler, spokesman for the $12.6 billion pension fund, in an e-mail.
OCERS will soon be conducting an asset allocation review and does not currently have an alternative income investment strategy as described in the RFP. The RFP was launched to help officials evaluate strategies that might be used.
The object is to find several “differentiated, proficient, seasoned and successful alternative income asset managers” the RFP said. Managers cannot be qualified to invest in an existing OCERS asset class such as traditional fixed income, high yield, emerging markets debt or diversified credit. The selected managers would be expected to produce net internal rates of return materially higher than OCERS’ 8% actuarial assumption, “after adjustment for risks including recession and equity or credit beta risks,” the RFP said.
Portfolios that could be under consideration include real estate debt; midstream and master limited partnerships; preferred or senior debt; non-distressed core-plus power; core-plus infrastructure including renewables; and liquid collateralized investment-grade debt.
Search results may be shared with other public pension funds, but OCERS decisions are not binding on any other pension fund, a news release said. Public pension fund aggregation pricing is desirable.
“At least three other California CIOs with capacity to invest in this space have anonymously expressed interest in `kibitzing’ during the semifinals,” the news release said.
Proposals are due at noon PDT on June 27, with a possible selection as early as September. OCERS officials expect to post a final RFP on June 2 on its website.
Separately, OCERS selected Meketa Investment Group as its general investment consultant, replacing NEPC, subject to contract negotiations. OCERS named Pension Consulting Alliance as its backup finalist. OCERS launched the search in January.
The pension fund also committed an additional $100 million to Cross Ocean Partners European Special Situations Fund II, a European private lending fund. In November, OCERS committed $50 million to the fund subject to negation on fees. OCERS has invested with Cross Ocean Partners in the past.
OCERS also placed oil and gas exploration private equity manager EnerVest on watch. Girard Miller, chief investment officer, declined further comment.