Chicago Teachers Dip Into Hedge Funds

May 20 2008 | 9:40am ET

The $11 billion Chicago Public School Teachers Pension & Retirement Fund is making its first foray into hedge funds, via funds of hedge funds.

The fund is looking to commit $300 million to fund of hedge funds managers based on recommendations by its consultant, Mercer. A source familiar with the search said Mercer is presenting a list of multi-strategy fund of hedge funds shops to the pension fund next month.

“This is more for diversification than anything else because it brings down the overall risk profile of the plan,” said the source.   

Mercer last month gave a presentation covering currency management, 130/30 strategies, portable alpha and hedge fund investments as part of the plan’s “first Friday” meetings on hedge funds and other investment opportunities. The plan also heard presentations from Silver Creek Capital, a $9 billion fund of hedge funds manager that invests in and hedges their bets in a diversified portfolio of hedge fund managers. 

The plan also heard presentations from Credit Suisse about private equity funds of funds, and Advanced Equities, a p.e. agent that arranges for pension funds to provide later stage equity to venture capital firms.

The source also mentioned that the plan, which currently commits some $239 million to p.e., is looking to allocate directly to p.e. shops.

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