Ill. Drops Grosvenor In Fee Dispute

Oct 3 2012 | 10:59am ET

The Illinois State Board of Investment parted ways with Grosvenor Capital Management after the hedge fund refused to cut its fees enough.

Grosvenor had accepted a one basis-point cut, from 76 to 75. But that wasn't good enough for the $11.4 billion ISBI, which gave the $237 million Grosvenor managed in a long/short fund of hedge funds, to two firms who were willing to cut their fees, and then cut them again.

ISBI negotiated an 8 bps cut with EnTrust Capital Management, Mesirow Advanced Strategies and Rock Creek Group, to 70 bps. Then, Entrust and Rock Creek agreed to shave a further 3 bps to get Grosvenor's share.

Rock Creek now manages $400 million for ISBI, and EnTrust $385 million, Pensions & Investments reports.

Separately, ISBI decided to stick with the THL Credit fund for a bank-loan mandate. Former manager McDonnell Investment Management Alternative Credit Strategies recently sold the fund to THL.


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