28/07/2010 Author: Kapila Gohel

Perac re-drafts placement agent policy

The Public Employee Retirement Administration Commission (Perac), which oversees $12bn in assets across 103 public pension systems in Massachusetts, has drafted a new placement agent policy.

The policy applies to investment partners that Massachusetts Public Employee Retirement Boards, including the Pension Reserves Investment Management Board (Prim), do business with, such as investment managers, sponsors of hedge funds, private equity, real estate and infrastructure funds.

The policy will require the pension funds to provide “timely and updated disclosure of placement agent relationships, compensation and fees”.

Perac’s executive director, Joseph Connarton, told HFMWeek that currently, “the Commission has only voted to have a public informational hearing on the draft sometime in September,” and it is still up for approval.

Connarton also added that Perac is discussing an amendment to its hedge fund guidelines relating to funds of hedge funds (FoHF) which will allow retirement boards some flexibility when investing in a manager with underlying funds that have a higher level of volatility than permitted by Perac.

“If, on average, the volatility is below the standard, then the board will have the ability to seek approval for that investment,” said Robert Dennis, investment director at Perac.

Pensions administered by Perac have an 8% limit on hedge fund allocations, in line with the Massachusetts Pension Reserves Investment Trust’s (Prit) allocation, a pooled fund which many of them invest in.

Of the 103 pensions under Perac, only four invest in hedge funds on their own, and another 30 through the Prit fund.