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U. California Loses Hedge Fund Chief, Looks to Recruit

With a transformation of the $90 billion fund's team nearly complete, a remaining senior role has opened up.
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The University of California’s (UC) longtime head of hedge funds Lynda Choi has submitted her resignation, CIO has learned.

Choi’s departure—scheduled for July 1—will end her decade-long leadership of the now-$6 billion portfolio, putting the managing director role up for grabs.

She is to leave behind a legacy of strong performance and an investment office that has almost wholly transformed over the past year.

CIO Jagdeep Bachher—formerly deputy CIO of Alberta’s sovereign wealth vehicle—took over the university’s $90 billion asset pool in April 2014, and began an overhaul several months later. Since last autumn, Bachher has hired or promoted more than 16 investment professionals and restructured much of the organization.

Edmond Fong, Choi's deputy of five years, has now been promoted twice. In August 2014, Bachher placed Fong in charge of UC's cross asset class division as managing director. In addition to this role, following his former boss' resignation, Fong has also been named interim head of the hedge fund portfolio. 

"Edmond is known by all of our hedge fund managers," Bachher said when reached by CIO.

To fill the role permanently, he is seeking "strong candidates who have an interest in working with perpetual capital and building upon a successful hedge fund program."  

Bachher complimented Choi’s dedicated service and track record of outperformance. After growing the hedge fund program from $300 million to $6 billion with approximately 30 external managers, Bachher noted, Choi “expressed a desire to take on new adventures and opportunities.” 

The portfolio gained an annualized 6.1% over the 10 years ending December 31, 2014, according to UC figures, beating its benchmark by 160 basis points and earning the institutional an additional $1.6 billion. 

More recently, Choi’s performance has been even stronger. The division’s 9.8% annualized three-year return trounced its 3.9% benchmark. Finally, she has granted her successor a 340 basis point head start of alpha for fiscal 2015.

Choi earned $514,681 in 2013—the most recent year for which figures are available—making her the sixth-highest paid employee in the UC’s Office of the President.

A number of high-profile investors have joined UC since Bachher took over, most recently former Sacramento County CIO and ex-hedge fund manager Scott Chan, who is now head of public equities.

Generous pay packets (Bachher joined for a target $1.23 million), vast capital, institutional support, and sovereign fund-style vision have attracted senior staffers from Norges Bank Investment Management, Ontario Teachers’ Pension Plan, and Bachher’s old stomping ground: the Alberta Investment Management Corporation.

While Bachher has completed much of his hiring for the overhauled team, he is “intent on absolutely making sure that we don’t hire based on having a job to fill.” Instead, he said, “we search for excellent talent, and in some cases create a role for them.” 

Despite the loss of its longtime leader, UC's absolute return portfolio does not appear to be headed for the same end as another giant California institution's now famously met with. 

Bachher confirmed he "believes that hedge funds have a role to play in our risk allocation framework. Funds pursuing unique investment strategies, willing to provide transparency from a risk factor perspective, aligned with the long-term and patient orientation of the UC Regents, and that are cost effective will remain attractive." Hedge funds, he concluded, "are not an asset class and have to be viewed within our risk allocation framework."

And with the absolute return team down to one investment officer, Bachher is on the lookout. (Interested?) 

Related Content: U. California Stacks Talent with Another CIO Hire; Jagdeep Bachher: The New CIO in Town

 

External Hires:

  • Scott Chan, Senior Managing Director, Public Equity (ex-Sacramento County Employees’ Retirement System)
  • Arthur Guimaraes, COO & Associate CIO (ex-AIMCo)
  • Brian Gibson, Senior Investments Advisor to the CIO (ex-AIMCo and Ontario Teachers’)
  • Ashby Monk, Senior Advisor to the CIO
  • Sam Kunz, Managing Director, Asset Allocation & Investment Strategy (ex-CIO of the Policemen’s Annuity and Benefit Fund of Chicago)
  • Niclas Winterstorm, Director, Operational Risk Management (ex-Norges Bank Investment Management)
  • Lindsey Adams, Director, Real Estate (ex-San Francisco Public Employees’ Retirement System)
  • Jessica Hans, Senior Investment Analyst, Private Equity & Real Assets (ex-Monsanto and Blackstone)
  • Matt Webster, Senior Investment Analyst, Private Equity & Real Assets (ex-Chertoff Group)
  • Sheng-Sheng Foo, Senior Investment Analyst, Public Equity (ex-California Endowment, a $3 billion foundation)
  • Thomas Fischer, Investment Officer, Real Estate (ex-Otto Finlay Investment, a real estate operating company)

Promotions:

  • Cay Sison, Director, Real Estate (formerly Investment Officer)
  • Paul Teng, Director, Deputy Head, & Acting Head, Public Equity (formerly Investment Officer)
  • Edmond Fong, Managing Director, Cross Asset Class Investments (formerly in absolute return unit)
  • Susie Ardeshir, Investment Officer

Exits:

  • Lynda Choi, Managing Director, Absolute Return
  • William Coaker, Senior Managing Director, Public Equity (now CIO of San Francisco Employees' Retirement System)
  • Mel Stanton, Deputy CIO (now retired)
  • Peter Taylor, CFO (now president of a private foundation)