California pension navigates alts landscape, adds $400m in credit

In its August meeting, the $52.8 billion Los Angeles County Employees’ Retirement Association (LACERA) trustees discovered that alternative investment portfolios are still being actively built as consultants such as Albourne deal with new due diligence realities. LACERA selected hedge fund firm Magnetar Financial to help round out growing $1.1 billion illiquid credit portfolio, which recently added Napier Park to manage $500 million in a portfolio of illiquid credit assets in a single-investor separate account structure. Magnetar was selected in May, but the $400 million allocation is being put to work this month. Also, the system is still working on building up its emerging manager program that may also be a component of the illiquid credit portfolio. On the hedge fund side, emerging managers are part of the equation too as consultant Albourne Partners researches potential strategies and funds for the roughly $2 billion diversified hedge fund portfolio as officials wind down the legacy fund of funds portfolio managed by Grosvenor. In a separate presentation to trustees, Albourne outlined that very little has changed in the vetting and due diligence process that has moved to a virtual environment with on-site visits being replaced by video calls. Very little has changed, according to the firm, which pointed out that managers will need to be more comfortable sharing documentation virtually and due diligence being conducted over multiple meetings rather than a single onsite meeting. At the same time, LACERA is searching for a real estate consultant that in turn it will likely vet remotely as the pandemic continues to rewrite the rules of pension investment management.

California pension navigates alts landscape, adds $400m in credit

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