San Diego Favors Global Macro, Market-Neutral, Cuts Multi-Strat, Credit

Apr 5 2010 | 11:53am ET

The San Diego County Employees Retirement Association is redeeming all of its investments in multi-strategy and credit hedge funds, its chief investment officer said.

Lee Partridge, the $7 billion public pension fund’s outsourced CIO, told HFMWeek that those strategies have no place in the new portfolio he is building for SDCERA. Partridge, who heads Integrity Capital, was appointed the plan’s CIO last year.

“We’re using hedge funds for two very specific things: We’re rolling out across global macro/CTA funds as well as bottom-up market-neutral strategies,” he said. “Most credit strategies have been played out.”

SDCERA’s new portfolio will allocate 10% to such strategies as relative value, global macro, commodities, market-neutral and volatility. It does not plan to terminate the handful of hedge fund managers, including Brevan Howard Asset Management and Bridgewater Associates, that survived the resignation last year of former CIO David Deutsche.

“We should be paying for skill-based return,” Partridge said. “Global macro, CTA and market-neutral funds are ‘pure play’ strategies and, in my opinion, it’s what hedge funds should be.”


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