San Francisco City & County Employees' Retirement System hired BlackRock for two new passive fixed-income strategies totaling $400 million that invest in U.S. government bonds.
The board of the $20.8 billion pension fund on Wednesday approved investing $300 million with BlackRock for a short-duration Treasuries strategy and $100 million for a long-duration Treasuries strategy.
Chief Investment Officer William J. Coaker Jr. said at the meeting the addition of the strategies to the pension fund's fixed-income portfolio will result in “barbelling” risk, improving liquidity and providing downside protection.
Funding for the new strategies will come from the liquidation of the pension fund's internal fixed-income portfolio; cash; reductions in another BlackRock strategy, a $953 million U.S. debt index fund; and possibly other areas of the fixed-income portfolio, Mr. Coaker said in a report to the board.
As of June 30, BlackRock managed more than $2.1 billion for the pension fund across three passive strategies: a $984 million equity strategy that tracks the Russell 1000 Value index, the U.S. debt index fund and a $165 million global REIT index strategy.
Mr. Coaker also disclosed that the retirement system had achieved a 1.3% investment return for the fiscal year ended June 30. He said while the number was quite low on an absolute basis, relative to its peers, the pension fund had results in the top quartile.