The San Diego City Employees’ Retirement System is committing about $120 million to a credit fund run by Grosvenor Capital Management LP that includes European and distressed fixed-income investments.
The $5.3 billion pension fund’s investment committee approved the allocation to Grosvenor March 13. Grosvenor will invest with an “opportunistic” credit strategy favoring higher-yielding credits over more traditional leveraged loans or bonds while avoiding equity risk, as investors seek better returns, said managing director Jon Levin.
Investors may meet goals for returns with “either an opportunistic credit trade, maybe a liquidation claim, or maybe it is a distressed security,” Levin said in a March 17 telephone interview. “Something that is more one-off or a niche-type investment because there is not a lot happening currently in your plain-vanilla corporate debt world.”
Levin declined to comment on the San Diego allocation. The capital will be called as needed during an 18-month investment period, according to Christina Di Leva, communications manager at the San Diego pension fund. The fund has no further comment, Di Leva wrote in a March 19 e-mail.
The investment firm manages $10 billion in credit, including $2.5 billion in separate accounts, said Levin, who worked at KKR & Co. (KKR) before moving to Grosvenor in 2011. The fund is also focused on mortgage and structured-credit investments, particularly in Europe, according to a proposal for the retirement system.
The system is between 68.5 percent and 70.4 percent funded, according to a March 14 statement by Fitch Ratings.