Notes from the Investment Committee meeting on March 31, 2021
The OP&F portfolio was valued at $17.20 billion as of March 30.
OP&F hires new non-US small cap equity manager
Following a search by staff and investment consultant Wilshire, OP&F has selected Barings International Small Cap to manage approximately $180 million.
In April 2020, OP&F terminated Franklin Templeton, which managed an international small cap mandate. In September 2020, OP&F adjusted its asset allocation policy that included changing the balance between U.S. and non-U.S. equities. The long term target for U.S. equities is now 21 percent of the total portfolio, while non-U.S. equities is 14 percent. OP&F’s prior long term equity targets were 16 percent each to both U.S. and non-U.S. equities.
Commitment to infrastructure manager approved
The OP&F Board approved a commitment of up to $125 million to KKR Diversified Core Infrastructure Fund at its March 31 meeting. KKR is an open-end core fund focusing on opportunities in North America, Western Europe and developed Asian markets. They will be investing in a diversified type of infrastructure projects.
The commitment will be in addition to the $578 million currently invested in the Real Assets portion of the OP&F portfolio. Real Assets currently is 3.4 percent of the total portfolio and has a target of 8.0 percent.
Bridgewater global macro put on watch
Bridgewater Associates, which manages a global macro account as a part of OP&F’s U.S. equity portable alpha strategy, has been downgraded in a manager review by staff. For this mandate, Bridgewater’s manages $888 million in a combination of its Pure Alpha fund and S&P 500 futures, and has had the account since 2007.
OP&F’s rating system assigns a number, 1-4, to managers when they are reviewed, with “1” being retain with no material issues, and “4” being termination. Bridgewater has been rated as a “2” since September 2016 and reviewed semi-annually since that time. With the downgrade to a “3,” Bridgewater will be reviewed quarterly until issues are resolved.
The reasons for the downgrade include performance, specifically in 2020, along with the size of the firm and capacity concerns in relation to assets under management.