INVESTING/PORTFOLIO STRATEGIES

Los Angeles Fire & Police renews Daruma, launches asset allocation study

Los Angeles Fire & Police Pension System officials renewed for three years the contract of Daruma Capital Management to run a $503.5 million active domestic small-cap equity portfolio, and launched an asset allocation study, said Tom Lopez, chief investment officer of the $18.5 billion pension plan, in an e-mail.

Pension fund officials originally hired Daruma for a $20 million portfolio as an emerging manager in August 1998. The new contract is set to expire on July 31, 2019. No RFP was issued. General investment consultant RVK assisted.

Separately, the board approved assigning Kleinwort Benson Investors’ contract to manage a $90 million active commodity public equity portfolio to French money manager Amundi. In May, Amundi said it would acquire 87.5% ownership of KBI from Oddo & Cie with the remainder being purchased by KBI management. RVK assisted.

In other action, the pension fund officials are in the process of an asset allocation study. The study has included discussions of risk; passive vs. active strategies; and equity and fixed-income structures. No date has been set for the board to make an asset allocation.

The pension fund’s current target allocation is 23% domestic large-cap equity; 16% international equity; 14% core bonds; 10% private equity; 7% real estate; 6% small-cap equity; 5% each emerging markets equity, commodities-energy and Treasury inflation-protected securities; 3% each high-yield bonds and real estate investment trusts; 2% unconstrained fixed income; and 1% cash equivalents.