Los Angeles County Employees Retirement Association, Pasadena, Calif., is initiating searches for a Treasury inflation-protected securities manager, real assets completion portfolio manager and specialized consultants, said Jonathan Grabel, chief investment officer for the $56 billion pension plan.
LACERA could issue as early as this month or September an RFP for additional consultants for hedge funds, illiquid credit and real assets, excluding real estate. These are new mandates. Current consultants are being invited to bid along with new bidders to all or part of the three mandates. Four percentage points of LACERA's 24% target allocation to its risk-reducing and mitigating asset class are in hedge funds. Three percentage points of its 12% credit allocation are in illiquid credit. LACERA has a 17% target allocation to real assets and inflation hedges asset class. The board could make a selection as early as January or February 2019.
Pension fund officials expect to launch as early as September an RFI for a manager to run a completion portfolio, which is a liquid real asset mandate. The selected manager would invest in an infrastructure and natural resources securities to maintain the infrastructure and natural resources suballocations. The portfolio will later be drawn down over time to provide proceeds to make private fund investments in infrastructure and natural resources. The completion portfolio will be used to maintain a consistent allocation to these subasset classes as cash flows to and from private fund investments. Mr. Grabel said up to a 4% allocation will be awarded that will be reduced over time. General investment consultant Meketa Investment Group is assisting.
LACERA officials will begin making private investments in 2019, subject to board approval. Three percentage points of the 17% real assets and inflation hedge allocation is targeted for private infrastructure and 4 percentage points is for private natural resources and commodities.
The RFI and RFP will be posted on LACERA's website.