It looks like New Jersey’s public-employee pension system will enter the next fiscal year without a new investment plan in place thanks to a lingering disagreement over how heavily to rely on hedge funds. The deadlock on the hedge-fund issue won’t bring investment activity for the $71 billion pension system to a halt when the new fiscal year begins July 1, but it will prevent in-house fund managers from enacting the fine-tuning they’ve recommended to keep up with changing financial markets over the next 12 months.
Based on past practice this may be for the best. For example:
Visium Balanced Fund, L.P
Maneck Kotwal along with Jake Walthour of Cliffwater presented a proposed investment of up to $150 million in Visium Balanced Fund, L.P. Visium is specialized in healthcare, which gives them an edge over generalist funds that invest in the healthcare space. The fund is managed with a market neutral exposure (+/-10%), making it a good complement to the long-biased orientation of a number of the managers in the equity-oriented hedge fund portfolio. Visium was founded in November of 2005 by Dr. Jacob Gottlieb along with the healthcare team which spun out of Balyansy Asset Management. The Fund has an attractive return profile with a 10.93% annualized return with 9.74% SD from inception through March 2012. Chair Grady reported that the Investment Policy Committee has determined that appropriate and adequate due diligence was performed.
- past performance not being an indicator of future performance,
- what ‘market neutral exposure’ or ‘long-based orientation’ really means, or
- why a fund specializing in healthcare has any edge over a diversified fund.
Practically any explanation will pass muster with the possible exception of the truth:
Politically connected advisers presented a proposed investment that is guaranteed to make everyone involved big money in fees for a few years and may even work out for the pension fund if it gets out before authorities catch on to how that money is being made and it all falls apart.