NEW YORK (Reuters) - The board of New York City's police pension fund has approved the first investment in a hedge fund by any of the city's pension funds, the city comptroller said on Wednesday.
Comptroller John Liu said the hedge fund investment will diversify the police pension fund's assets.
"We expect to initiate a hedge fund-of-funds program, which is to be followed by a series of direct investments in hedge funds," he said in a statement.
The Permal Group was chosen at a March 1 board meeting, but its selection still must be finalized. According to its web site, the Permal Group is an alternative asset management firm, which was established in 1973 and has 200 employees. (For details, please see: http://www.permal.com/ )
New York City's five pension funds have an unfunded liability estimated at $76 billion to $122 billion, which puts more pressure on its investment managers.
New York City Chief Investment Officer Larry Schloss said that adding hedge fund stakes builds on the commitments of the comptroller and the Board of "protecting pensioners and taxpayers."
The hedge fund allocation is expected to total $150 million -- a fairly small amount for the $23.1 billion police pension fund.
Some of New York City's other pension funds are also exploring hedge fund investments.
The police pension fund is several years behind the state's pension fund when it comes to investing in hedge funds.
Hedge funds and investment managers prize investments made by public pension funds because they typically must go through a rigorous review process, and successfully passing those tests helps persuade other fund managers to make the same investments.
(Reporting by Joan Gralla; Editing by Diane Craft)
