Los Angeles City Employees' Retirement System officials in January plan to launch five searches totaling about $4.5 billion to evaluate the current marketplace for core fixed-income, emerging markets debt, U.S. small-cap equities, high-yield and bank loan credit, and emerging markets small-cap equities managers, according to Oct. 23 board meeting minutes.
The board of the $17.1 billion pension fund is launching the searches as a result of a new asset allocation adopted in April.
The core fixed-income search will be for managers to run a total of $2.44 billion. The emerging markets debt allocation will be $800 million. The domestic small-cap equities search will have three mandates: $178 million each to U.S. small-cap core, U.S. small-cap value and U.S. small-cap growth. The credit search will be for managers to run two mandates: $235 million each to high-yield credit and hybrid high-yield/bank loan credit. The emerging markets small-cap equities search will be for a manager to run $240 million.
Current managers are invited to rebid. The RFPs will be posted on LACERS' website. Selections are expected as early as June. LACERS' general investment consultant, NEPC, is assisting.
Separately, in the fourth quarter LACERS expects to commit $100 million to $150 million in additional capital to private equity and $550 million to $575 million in 2019, according to a report to the board by LACERS' private equity consultant, TorreyCove Capital Partners. In 2018, LACERS committed a total of $345 million to 14 managers through Sept. 30, including the latest commitments of $10 million to P4G Capital Partners I, the first fund of new lower middle-market growth equity manager P4G Capital Management; and $40 million to buyout fund Hellman & Friedman IX. LACERS has committed to previous Hellman & Friedman funds.
Also LACERS officials might consider selling some of its private equity limited partnership commitments on the secondary market in 2019. The TorreyCove report noted that LACERS has 120 private equity manager relationships for its $1.7 billion portfolio, a relatively large number, and LACERS officials plan to explore a sale to decrease the number of relationships and monetize older investments.
