Ohio uncertain on alternatives consultant

The $72 billion Ohio Public Employees Retirement System is looking for an investment consultant to advise on its $10 billion alternatives program, and is considering whether to hire separate consultants for each asset class or one consultant to advise on the entire program.

The fund, which has $60 billion in the defined benefit fund and the remainder in health care, has about $3 billion in private equity, $5 billion in real estate, $665 million in hedge funds, $800 million in REITs, and $98 million in commodities.

The RFP document outlines that the OPERS board wants to consider whether to consolidate all strategic alternatives investment consultant relations with one firm or to retain its existing arrangement of separate mandates – for private equity, real estate, and for the first time, hedge funds.

“OPERS understands that consolidating services with fewer providers usually provides cost savings. Nonetheless, OPERS also understands that many plans retain specialist expertise through separate consultant mandates, as OPERS is currently structured. Consulting firms have developed different business models. In some cases, those models are in transition,” the document says.

With this in mind, and in particular the consideration of the value proposition of using separate services for alternatives asset classes, the fund is asking for proposal on two distinct levels: either for individual asset classes; or as strategic alternatives consultant, combining all three.

Services for alternatives would include market overview and strategy for each asset type as well as policy advice, program guidelines, sector allocations, and investment pacing models but would not include manager-level selection or advice.