LACERS considers Prudential for EM debt

Los Angeles continues its credit push with a $200m mandate for emerging markets debt.

The Los Angeles City Employees’ Retirement System’s investment staff has recommended Prudential Fixed Income to manage a proposed $200 million mandate for emerging market debt, according to meeting materials.

The pick remains subject to the approval of LACERS’ Board of Administration, which is scheduled to vote on the recommendation at its meeting Tuesday.

“The firm exhibits organizational stability, a strong management team, a well-articulated investment strategy consistent with LACERS objectives, a unique investment research process, well-defined risk management and compliance practices, and a track record of adding value over various market cycles,” according to a recommendation from LACERS general manager Thomas Moutes. “Staff also received positive feedback from references of the firm.”

A representative from LACERS’ investment office could not be reached for comment.

The emerging market debt mandate is an element of the $10.6 billion retirement system’s 5 percent allocation to credit opportunities, which was approved by the board on 10 January 2012. The emerging market mandate would take effect 1 October and run through 30 September, 2016, according to a copy of the proposed resolution.

In addition to emerging markets debt, the new allocation includes investments in high yield and opportunistic fixed income.

Prudential has approximately $400 billion in assets under management through its fixed income portfolio, $27 billion of which is dedicated to emerging markets as of 31 March, according to presentation materials made available by LACERS. The emerging markets team is led by David Bessey, who has been at Prudential for 24 years.

The firm beat semi-finalists Columbia Management and Standish Mellon Asset Management for the LACERS staff recommendation. Portfolio advisor Wilshire Associates concurred with the staff’s recommendation, according to meeting materials.