The San Diego City Employees’ Retirement System (SDCERS) will consider Grosvenor Capital Management for a credit opportunities account at its investment committee meeting Thursday, according to materials released on the system’s website.
The separate account would manage 2 percent of SDCERS’ assets, or roughly $120 million. In January, SDCERS established the allocation through its Opportunity Fund, which pursues investments via strategies that do not fit within traditional asset allocation models.
SDCERS chief investment officer Liza Crisafi told Private Debt Investor that the retirement system would likely establish separate account for credit opportunities when the board approved the strategy in January.
“The original allocation’s 2 percent, but we want to have the opportunity – at some point in the future – to increase that allocation. And a separate account gives us the flexibility to do that,” she said.
The Grosvenor account would invest in corporate, mortgage and structured credits through 10 to 20 underlying managers, according to a Hewitt EnnisKnupp report included in SDCERS meeting materials. The bulk of those investments would be US or European in nature with modest exposure to Asia.
The self-liquidating separate account would have a six year fund life with an 18 month investment period. Grosvenor would charge an annual management fee of 75 bps on invested capital, according to Hewitt EnnisKnupp.
Hewitt EnnisKnupp cited Grosvenor’s attractive risk/return profile, experience, sourcing ability and favorable fund terms as key reasons behind its recommending the firm for the account.
“In our opinion, GCM’s investment process is disciplined and repeatable with the appropriate checks and balances,” according to the report. “GCM benefits from its broad industry contacts and relationships in sourcing underlying funds and structuring portfolios”