Jacksonville (Fla.) City Retirement System will fully redeem from the UBS Trumbull Property Fund, the open-end core real estate fund managed by UBS Asset Management, in which it currently invests $59 million.
The $2.3 billion pension fund voted for the full redemption at its Feb. 22 meeting, recently released meeting minutes show.
Investment consultant RVK recommended the termination due to continued underperformance by the UBS fund. In a memo included with Feb. 22 board meeting minutes, RVK noted that UBS Asset Management limited its redemption queue following underperformance in the second quarter of 2018.
Once that queue became a significant amount of the fund’s assets, UBS Asset Management offered a loyalty program to investors for either three or four years depending on the size of the fee discount selected to remain invested in the fund. The Jacksonville retirement system selected a three-year program at a 15% discount, which was set to expire on March 31.
RVK said in the memo that expiration date made for an ideal time to reevaluate the investment and that the firm “has lost confidence in UBS’ ability to manage the fund driven by investment performance” that has continued to lag the NCREIF Fund Index – Open End Diversified Core Equity. RVK said in the memo they expect it to take several years to receive the full proceeds.
A spokesperson at UBS declined to comment.
