Florida goes truly global after investment restructure

The Florida Retirement System has restructured its investments with a move to combine its US and international equities portfolios into one global strategy.

The $110 billion fund’s trustee board approved this week the change of thinking on equities following a review by consultant Ennis Knupp, which has prepared a new asset/liability model.

The board also approved the search, for the first time for the fund, of managers to run new hedge fund and infrastructure exposures.

As a result of the new alternatives planned, the fund will need legislative change to lift the current limit of 10 per cent of its total assets which can be invested in unlisted securities and hedge funds.

Partly to counter the rising costs of the increased alternatives exposure and partly to reduce overall portfolio risk, the fund will increase its passive equities and fixed interest allocations.

Prior to the changes, the fund has invested about 37.4 per cent of assets in US equities and 20 per cent in international (non-US).

The state’s Attorney General, Bill McCollum, was quoted as saying: “Because of the way the world economy looks at the present time and the way that everything’s shaping up for the next few years, one would not has as rosy a scenario for the domestic equity markets (as previously). Therefore, we need to make these changes.”

The fund’s executive director, Ash Williams, is a former Wall Street hedge fund manager. He was quoted in the Miami Herald as saying: “All hedge funds are not created equal. It’s not something that should cause you to lie awake at night.”

Williams is said to have told the three-member fund advisory panel that hedge funds had “held up” far better than broad market equities during the 2008 market crash.