The Los Angeles City Employees’ Retirement System’s board of administration is considering launching a search for a manager to invest in bank loans, according to 8 October meeting materials released through its website.
LACERS will allocate approximately $60 million to the mandate, according to retirement system documents.
The $11.9 billion retirement system will seek one or more managers to target long-only, publicly traded bank loans. The search is a component of LACERS’ new asset allocation that calls for a 5 percent target allocation to credit opportunities. Approved last year, the new allocation characterises credit opportunities as high yield, emerging markets debt and opportunistic fixed income. The opportunistic fixed income component – a 0.5 percent allocation overall – includes structured credit and leveraged loans.
The search process will be limited to managers with at least $50 million in assets. The investment mandate’s performance will be judged against the Credit Suisse Leveraged Loan Index, with an objective of outperforming that benchmark by 50 basis points.
LACERS’ advisor Wilshire Associates has found 19 managers with bank loan strategies that meet the minimum qualifications of the search, according to documents. The search is expected to be completed in the first quarter of 2014.