Az. Mulls Seeding Program As Alts. Investments Continue Apace

Jan 14 2011 | 10:37am ET

An Arizona pension that has poured more than $200 million into hedge funds in recent months is preparing to jump into hedge fund seeding.

The Arizona Public Safety Personnel Retirement System plans to launch a seeding program by the end of the year, Hedge Fund Alert reports. The move would make the $6.5 billion system one of a few public pension funds to make seed investments in hedge funds.

Ryan Parham, chief investment officer, said that the pension's hedge fund consultant, Albourne Partners, would advise on manager selection but that few other details have been worked out. It is unclear, for instance, if Arizona would take a stake in the firms and a part of their profits, for instance.

Parham did say that the system is likely to favor former proprietary traders in seeking out seed investments. He also said that he's spoken to several other public pension funds which might become co-investors alongside Arizona.

The ambitious seeding plan comes after a busy few months of alternative investing for the pension. The fund most recent allocated $40 million to emerging markets debt fund Iguazu Partners, run by Wellington Management. Since November, Arizona has awarded mandates of $70 million to Bridgewater Associates, $60 million to Centerbridge Partners, $50 million to Davidson Kempner Capital Management, and $40 million each to Luxor Capital Partners and the LSV Special Opportunities Fund.


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