San Diego Public Pension Looking to Boost HF Allocations, Avoid Salary Caps

(June 22, 2010) — The San Diego County Employees Retirement Association is looking to increase allocations to its global macro hedge fund managers.

The $7 billion public pension may up the allocation to Brevan Howard Asset Management to $165 million and that of Bridgewater Associates to $100 million. Additionally, according to Pensions & Investments, the system may increase Graham Capital Management’s allocation to $90 million from $60 million.

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Last week, the San Diego fund approved the allocation to the global macro strategies with $115 million going to the BlackRock Global Ascent Fund and $35 million to the BlackRock Emerging Markets Macro Fund. Funding for the two hedge funds would come from the association’s target 70% stable value allocation. The $150 million to Blackrock’s funds were recommended by SDCERA’s outsourced chief investment officer provider, Integrity Capital, headed by Lee Partridge, and the pension’s internal assistant-CIO Lisa Needle.

The SDCERA also added State Street Global Advisors (SSgA) to its pre-approved list of derivatives and futures managers, P&I reported.

Additionally, the pension fund is forging ahead with its nearly year-long push to free its investment team from its own salary caps. The firm is reportedly considering creating a nonprofit investment company that would allow it to avoid county salary limits for employees, whose salaries are currently capped at $209,372 annually, voiceofsandiego.org reported. Last year, the fund avoided the salary limits by hiring consultant Partridge as its chief investment officer. Tomorrow morning, the fund’s attorney’s are scheduled to discuss ways a nonprofit could be structured.

Other public pension funds in the country with nonprofit structures include the University of Texas and the Municipal Employees’ Retirement System of Michigan.