San Diego Pension Shifts Its Private Equity Portfolio

(February 12, 2010) – As part of its ongoing asset-liability study, the $7 billion San Diego County Retirement Association (SDCERA) will be aiming to shift its private equity assets.

The public pension fund will reallocate private equity assets to distressed investments and intellectual property funds, Pensions & Investments reported. The system’s new outsourced CIO, Lee Partridge of Integrity Capital, is assisting with the strategy.

The California pension will invest $25 million with private equity firm Atlantic-Pacific Capital’s Drug Royalty II fund. Additionally, under the fund’s private equity planning strategy, it’s seeking to redeem its $43 million investment in a multistrategy hedge fund managed by UBS O’Connor.

This follows Denmark’s pension fund ATP, which manages 609 billion Danish crowns ($112 billion), announcing to invest 1 billion crowns annually in hedge funds and doubling its exposure to private equity.

According to Reuters, the scheme is striving to achieve an “all weather portfolio” by implementing a long-term strategy that will obtain returns independent from market conditions.

Separately, a survey by Global Private Equity Barometer from Coller Capital at the end of last year suggested Asian and European institutional investors are more weary of private equity investments than their North American peers. According to the survey, Asian, European and North American segments see 2010 as a good vintage year for private equity, with 85% saying that this will be likely (a “good” or “excellent” chance), as opposed to only 2% who believe it to be unlikely.