Updated with correction
Sacramento County (Calif.) Employees' Retirement System will conduct an invitation-only search for a domestic small-cap equities manager to run about $75 million, confirmed Steve Davis, chief investment officer for the $10.7 billion pension plan, in an email.
Funding will come from its current small-cap manager, Dalton, Greiner, Hartman, Maher & Co., which was terminated "due to a significant leadership change within the organization," Mr. Davis said.
In July, Anthony DeChellis, CEO of DGHM’s parent company, Boston Private Financial Holdings, replaced Bruce Geller as chief executive of the boutique manager.
“Establishing a closer working relationship between DGHM and Boston Private empowers DGHM with greater access to the depth and breadth of Boston Private’s resources,” a DGHM spokesman said in an email.
The funds will be held in a passive strategy managed by State Street Global Advisors while SCERS conducts the search.
Separately, SCERS continues to liquidate its position from SC Absolute Return Fund, Series B, a diversifying hedge fund managed by Grosvenor Capital Management. After redeeming $20 million in June and $9 million in July, SCERS redeemed an additional $20.5 million in August, currently leaving roughly $2.2 million in the fund, which will eventually be redeemed.
SCERS intends to fully liquidate the Series B mandate with Grosvenor, which was designed as an interim solution while the retirement system built out its direct absolute return portfolio. The redeemed capital will be used to fund other direct absolute return investments.
In addition, the following three hedge funds remain on the system's watchlist:
- Lakewood Capital Partners, which runs $37 million on behalf of the plan.
- Winton Capital Management's Winton Diversified Futures Fund.
- KLS Diversified Asset Management's KLS Diversified Fund, both of which manage $33 million.
All three funds were placed on watch as of July 20.
As previously reported, the Lakewood growth fund was put on the plan's watchlist for performance reasons, while the Winton and KLS diversifying funds were placed on watch because of performance and organizational issues. A Winton spokesman declined to comment, while representatives from Lakewood and KLS could not be reached for comment.