Los Angeles Water & Power Employees’ Retirement Plan hired AQR Capital Management to run a total of about $478 million in active emerging markets equities.
The retirement plan’s board approved the hiring at its Jan. 22 meeting, a board resolution posted on its website showed.
The retirement plan issued an RFP in July for a potential replacement for incumbent manager Los Angeles Capital Management.
According to a Sept. 20, 2023, memo to the board from Linda Le, retirement plan manager, included with Jan. 22 board meeting materials, Los Angeles Capital Management has been on watch since 2019 due to organizational issues. At that time, an investor representing 60% of LACM’s emerging markets equity commingled fund made a full redemption, increasing the water and power retirement plan’s weight to 45.5% from 12.5% of that commingled fund. As the manager’s emerging markets assets under management have declined, that weight has since increased to 88.6%, creating an increased concentration risk.
“While there are no concerns with LA Capital's ability to manage within this structure, the Plan does absorb a disproportionate amount of operating costs associated with this commingled vehicle,” Le said in the memo.
Acadian Asset Management, Arga Investment Management and Man Numeric were the other finalists.
Once contract negotiations are finalized, AQR Capital will manage about $406 million for the retirement plan’s $18.5 billion defined benefit plan and $72 million for its $3.4 billion health plan.
Investment consultant RVK assisted.
