OCERS Latest Pension Fund To Trim Active Investment Managers

Apr 5 2017 | 7:32pm ET

The Orange County Employees Retirement System, or OCERS, has joined the ranks of public pension funds trimming back on allocations to active investment managers. 

The $14.1 billion pension plan reportedly decided in late March to redeem capital from funds managed by Franklin Templeton Investments, JPMorgan Chase & Co, PIMCO, Grantham Mayo Van Otterloo and Standard Life, in favor of lower-cost passive index-tracking investments, according to Reuters citing an article in FundFire. Assets being moved total more than $1 billion, the article said. 

The decision is reportedly based at least partly on recommendations by investment consultant Meketa Investment Group, which outlined millions of dollars in savings that could be obtained by moving some of the fund’s capital to passive investments and avoiding the “historical underperformance” of some managers. 

OCERS’ decision should not come as a surprise to the alternative investment community, as it has contemplated reducing its hedge fund allocations since at least mid-2016. In conjunction with Meketa, the pension manager undertook an asset allocation study in the third quarter of last year and eliminated its 14% allocation to absolute return strategies in January.

Some hedge funds made it through OCER’s cut, including funds managed by PIMCO, D. E. Shaw and Bridgewater Associates, the article added.

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