Bear Stearns’ summertime blues were not limited  to its subprime hedge funds. The $2 billion Seattle City Employees' Retirement System in August terminated its portable alpha mandate with the beleaguered firm over performance issues and management changes.

In its stead, the system has reallocated $60 million of Bear’s $80 million domestic equity mandate to a Russell 3000 index fund and another $10 million to its internal portable alpha test program, according to minutes from the system’s recent meeting.

The retirement board also recommended allocating the remaining $10 million to the Quellos Alpha Transport vehicle, which is a portable alpha strategy that uses a diversified fund of hedge funds with very low volatility and low correlation with the broader markets.

“The historical investment performance of this fund shows that more often than not, we hope to achieve alpha of at least 3%,” according to the board.