Louisiana Firefighters' Retirement System, Baton Rouge, is eliminating its target allocation to hedge funds and reducing its target to private equity following an asset allocation review, according to recently released board meeting minutes.
The $1.3 billion pension fund's previous target to hedge funds was 5%. The board voted to remove the target allocation entirely at its March 13 meeting following a recommendation by investment consultant NEPC.
As of March 31, the pension fund's actual allocation to hedge funds was 0.6%, or about $8 million. About $4.5 million was invested in CA Recovery Fund, managed by Sand Spring Management; $2.7 million in the Clinton Group Magnolia Fund; $1 million in Sand Spring Capital III, also managed by Sand Spring Management; and $100,000 in Scoggin Fund, managed by Scoggin Capital Management.
The pension fund's history with hedge funds has long been marred by its March 2008 investment of $45 million in hedge fund Fletcher Income Arbitrage Leveraged Fund, managed by Fletcher Asset Management. The manager declared bankruptcy in 2012 following allegations of fraud; the pension fund is still attempting to recover its money.
The board also voted to reduce its target to private equity to 8% from 12%. As of March 31, the actual allocation was 6.9%.
The target to core fixed income was increased to 19% from 15%; the actual allocation as of March 31 was 17%. Also, domestic large-cap equity was increased to 16% from 14%; the actual allocation as of March 31 was 22%.
The international equity target was also increased, to 12% from 11%: the actual as of March 31 was 11%. The target to global equity was increased to 10% from 8%; the actual as of March 31 was 10%.
Steven Stockstill, executive director, did not respond to requests for further information by press time.