NYC Police fund picks Permal for first hedge fund investments

  • By: Cristina Alesci and Jason Kelly at Bloomberg News
  • 04 Mar 2011
  • Be the first to comment
  • Print
  • Send

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.


Visitors comments

Get the latest news direct to your inbox.

Pensions library


A guide to Pensions Stability


This guide to Pensions Stability explores the new financial and operational model for defined benefit (DB) pension schemes. Pension schemes are still being run with far greater risk than is necessary and there is an opportunity to create a more stable pensions environment for trustees and sponsors.


Joint institute pensions survey 2014


This inaugural survey among 326 members of the Chartered Institute of Personnel and Development (CIPD) and the Pensions Management Institute (PMI) asked whether auto-enrolment will deliver on its goals; if contribution rates for employees and employers need to rise; and whether pensions tax relief needs further reform.

Job of the week