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San Diego Union Tribune – The county pension board’s chief investment officer has resigned a week after a second hedge fund collapse in which employee retirement investments could lose as much as $78 million.
David Deutsch, who held the job for five years, oversaw a $2.5 billion loss in pension assets since June 30.
He had pushed the San Diego County Employees Retirement Association – which manages retirement benefits for 35,000 county retirees and current employees – to invest heavily in hedge funds.
The association’s board accepted his resignation in closed session yesterday. His last day will be March 19.
Brian White, the association’s chief executive, said Deutsch didn’t give a reason for his departure and wasn’t given a severance package.
Asked if Deutsch was under any pressure because of investment losses or hedge fund problems, White said, “I think we’re all under a lot of pressure because of the market.”
Times Online – The Massachusetts Pension Reserves Investment Management Board, which oversees $38 billion, voted to fire hedge-fund firm Austin Capital Management after losing $12 million with alleged Ponzi scheme operator Bernard Madoff.
The state pension board also decided at a meeting in Boston today to dismiss Ivy Asset Management, the hedge-fund unit of Bank of New York Mellon Corp., because several senior managers have left the firm. About $430 million in pension assets were invested with Ivy and $130 million with Austin, the board said.
Austin invested pension assets with Tremont Partners, the hedge-fund unit of Massachusetts Mutual Life Insurance Co. Tremont placed money through its Rye Select Broad Market Prime Fund LP with Madoff, the New York financier accused of fraud in a scheme that may have cost clients $50 billion.
Voiceof San Diego – San Diego County’s pension fund is slashing its $1 billion hedge-fund portfolio and acknowledging that the investments it once championed have become too risky and no longer make sense.
The board of the San Diego County Employees Retirement Association voted unanimously Thursday to reduce the size of its hedge-fund portfolio by more than half. That will free up $600 million, half of which will be held as cash. The rest will be reinvested in the portfolio.
The pension board also agreed to curb the aggressive strategy the $7.5 billion fund used to finance its hedge fund investments. Under the "alpha engine" strategy, the county bought financial derivatives known as swaps that were essentially bets on the market. Much like bets on a Chargers game, the swaps cost nothing initially, which freed up cash for hedge fund investments. When the market rose, the swaps made money, but in recent months, they cost the pension fund millions of dollars. Last month, the board voted to free up $100 million in cash to protect against further declines.
