US - New York City’s police pension hired Permal Group to invest in hedge funds, choosing the Legg Mason unit over firms including Blackstone Group.
The Board of Trustees of the New York City Police Pension Fund voted yesterday to commit capital to Permal, it said in an e-mailed statement. The commitment, the first by a New York City pension fund to hedge funds, is subject to the negotiation of an acceptable contract.
Pensions, stung by the financial crisis and hampered by low interest rates, are trying to boost returns by diversifying into riskier and more liquid strategies. State and city plans across the country are weighing proposals to increase the portion of assets allocated to alternative investments such as hedge funds and real estate.
"This investment will help to diversify the fund's assets in a prudent manner, which will in turn benefit the members, retirees and beneficiaries," said Joseph Alejandro, Police Pension Board representative of PBA President Patrick Lynch.
J. Tomilson Hill, head of Blackstone's hedge fund-of-funds unit, pitched the police pension for the mandate, according to a person with knowledge of the bidding who asked not be named because the meeting was private. Peter Rose, a spokesman for New York-based Blackstone, declined to comment.
Blackstone has been trying mend fences with New York's unions following comments last year from its chief strategist, Byron Wien, that public pension benefits are "too generous." Last month, Alejandro proposed that trustees be allowed to fire fund managers who criticize workers' benefits or disparage a public pension.
Permal, which is based in London, posted returns of 8.4% in its fund of hedge funds for 2010, according to a person familiar with the results who asked not to be named because the firm is private. Blackstone's fund of hedge funds had returns of 8.5% for 2010 and 3.6% in the fourth quarter, the firm said when it reported earnings last month.
Fund-of-funds managers averaged gains of about 2.3% last year, according to data compiled by Bloomberg. Such funds managed about $646bn globally as of the end of 2010, according to Hedge Fund Research, a Chicago-based research firm.
Club Vita has joined forces with Legal & General (L&G) to make longevity insurance solutions more accessible for smaller defined benefit (DB) pension schemes.
Ascot Lloyd Pension Trust has submitted its application for the Pensions Regulator’s (TPR) Master Trust Assurance Framework (MAF) accreditation.
The delay in finalising major changes to the local government pension scheme’s investment regulations is already causing problems for pooling, funds have warned.
PP asks seven leading risk reduction consultants about deal affordability, the risk reduction exercises being conducted at the moment and how schemes can prepare for a transaction