Alameda County Employees' Retirement Association, Oakland, Calif., hired Parametric Portfolio Associates as cash overlay services provider.
The $9.8 billion pension fund's board approved the hiring of Parametric at its April 15 meeting, spokesman Michael Fara said in an email.
The pension fund launched a shortlist search in April 2020 for a cash overlay service provider. NISA Investment Advisors and Russell Investments were the other finalists. The average monthly balance of the cash equitization overlay program is expected to be $30 million, according to board meeting materials.
Separately, the board approved a change in ACERA's absolute return asset class return structure. Within the pension fund's 9% target to absolute return, the pension fund increased the target to hedge funds of funds to 80% from 40%, other alternatives/opportunistic funds to 20% from 10% and eliminated the 50% target to alternative premium strategies.
A memo from investment consultant Verus Advisory included with April 14 investment committee meeting materials said the portfolio's concentrated alternative premium strategies' performance over the 2019-2020 period was "sub-optimal for the current, and likely go-forward market environment."
The new structure is "expected to enhance the AR portfolio by increasing its diversification, active management and exposure to alpha-oriented strategies."
The pension fund plans to conduct a shortlist search for a manager to run a customized "fund of one" portfolio of up to $350 million as a result of the structural change.
As of Feb. 28, the actual allocation to absolute return was 6.9%.
Verus Advisory assists with all asset allocation changes and manager hirings.