Los Angeles Water & Power Employees' Retirement Plan placed Blackstone Alternative Asset Management on watch for the $914 million hedge fund-of-funds portfolio it runs for the plan's $16.4 billion defined benefit plan.
The retirement plan's board at its Sept. 27 placed BAAM on watch for the Hope Street Fund it manages due to performance concerns, according to an approved board resolution posted on its website.
BAAM also manages $163 million for the $3 billion retiree health benefits fund.
As of June 30, the DB plan's actual allocation to hedge funds was 5.6%; the target is 5%.
A Blackstone spokesperson said in a statement that "since January 2021, Hope Street was positive in all three years and delivered strong performance, outperforming a global 60/40 portfolio by over 24% with a Sharpe ratio of [greater than] 2. In 2022, Hope Street delivered 11.3% net returns to LADWP despite one of the worst markets in recent history when a global 60/40 was down -17%."