A large California pension fund is searching for a new investment chief amid concerns about an outside firm’s investment strategy, the latest clash between public retirement systems and external advisers, the Wall Street Journal reported today. The board of San Diego County Employees Retirement Association authorized the move in an 8-1 vote that requires the $10.5 billion fund to install an internal investment chief instead of relying on Houston-based Salient Partners LP for that role. Directors stopped short of ending a contract with Salient, which suggested an investing strategy that uses derivatives to boost performance. Salient is paid $8 million annually to act as the system’s chief investment officer and manage retirement assets for county employees. The strategy involves buying futures contracts tied to the performance of stocks, bonds and commodities. Salient recommended the approach, which would allow the pension fund potentially to receive bigger gains, and possibly suffer larger losses, than it would by owning the assets themselves.
