Pension Funds

Texas County & District retains Cliffwater as investment consultant

Fund also commits $200 million additional to global, emerging market equities

Trustees of Texas County & District Retirement System, Austin, approved retaining Cliffwater, the long-tenured investment consultant to the $29.1 billion defined benefit plan, at a board meeting April 11.

Board policy requires regular review of adviser contracts and the board opted to extend Cliffwater's contract though 2023 rather than conduct a search, TCDRS spokesman Russ Rhea said in an email.

Cliffwater's current contract expires Jan. 1. Cliffwater has been the fund's consultant since 2005.

Trustees also awarded existing manager Marshall Wace a total of $200 million to split equally between actively managed global equity and emerging market equity portfolios.

Marshall Wace manages a hedge fund portfolio for TCDRS but the size of the portfolio could not immediately be learned.

Funding for the new Marshall Wace portfolios will come from the termination of two of the seven managers running the fund's $4.3 billion actively managed international equity portfolio after a regularly scheduled due diligence review.

TCDRS will redeem $263 million managed by AQR Capital Management and $260 million run by Causeway Capital Management.

Mr. Rhea declined to provide reasons for the terminations in an email, noting "TCDRS doesn't comment on any manager's performance." He said TCDRS' investment team hasn't decided where to redeploy the rest of the assets from the terminations of AQR and Causeway.

The remaining managers of the active international equity portfolio are Marathon Asset Management, $1.5 billion; J.P. Morgan Asset Management (JPM), $741 million; Viking Global Investors, $606 million; Dimensional Fund Advisors, $516 million; and Wellington Management, $394 million.

The board also accepted 2019 capital market assumptions presented by the TCDRS investment team and amended the fund's asset allocation targets accordingly.

In the equity portfolio, target allocation changes were U.S. equity to 10.5% from 11.5%; international developed market equity to 10% from 11%; emerging market equity to 7% from 8%; and global equity to 2.5% from 1.5%.

In fixed income, target allocation adjustments were strategic credit to 12% from 8%; direct lending to 11% from 10%; investment-grade bonds remained at 3%; and distressed debt remained at 2%.

Among alternative investment portfolios, TCDRS' target private equity allocation increased to 18% from 16%; the hedge fund allocation dropped to 13% from 18%; and the targets remained the same for private real estate, 6%; master limited partnerships, 3%; and real estate investment trust equities, 2%.