The $13.2 billion Los Angeles Fire and Police Pensions is undertaking a review of its private equity programme to consider whether to continue the programme, and also whether to end relationships with underperforming managers.
LA Fire and Police is planning an asset allocation study to review its private equity and hedge fund investments, according to documents from the board’s April 1 meeting. Michael Perez, general manager of the fund, did not return calls by press time. As part of the study, the pension will review its investment managers. The fund allocates 10% to private equity.
R.V. Kuhns, the pension’s general consultant, is assisting with the study, which will be presented to the board on April 15.
CIO Tom Lopez said in a memo to the board, “One of the board's primary responsibilities is to balance the growth of assets and liabilities over time so as to ensure the continued funding of benefit payments to the system's members. An integral part of this process involves determining the proper asset mix for the fund's investment program by means of an asset allocation study. An asset allocation study explores the relationship between risk and return and its results provide the mix of investments in the fund portfolio. Asset allocation drives the majority of long-term investment performance and should be considered with great care.”
Asset allocation drives the majority of long-term investment performance and should be considered with great care.
Recently, the pension committed $10 million to Angeleno Investors III, a fund that was targeting $250 million for investments in alternative energy and clean technology companies in the US. The Angeleno Group was founded in 2001 as a Los Angeles-based venture capital firm by Yaniv Tepper, Daniel Weiss and Zeb Rice.
Last year, LA Fire and Police decided to scrap the structure of its private equity programme and hire a single consultant who would be in charge of building the pension’s private equity portfolio. LA Fire and Police had been using two private equity consultants – Aldus Equity and StepStone Group.
The pension fired Aldus in May after the firm and its founder, Saul Meyer, were charged with participating in a pay-to-play scheme involving the New York State Common Retirement Fund. The pension was caught up in the New York investigation after the US Securities and Exchange Commission asked two members of the pension board – Elliott Broidy and Sean Harrigan – to turn over information about communications they had with Aldus, Wetherly Financial, StepStone and Pension Consulting Alliance.
Harrigan is a former president of the California Public Employees’ Retirement System, and Broidy founded Markstone Capital Group, a private equity firm with an $800 million fund.