We have interviewed several investors asking them about the biggest issues they are facing at the moment. Here's what Tom Tull, CIO of Texas ERS, told us.
Name: Tom Tull
Role: CIO, Investments Division, Employees Retirement System of Texas
City: Austin, US
When Bill Gross decided to change his engagement, it provided us with an opportunity to hit the market place. We are in the process of building our high yield credit book, so when we saw Florida indicate they were going to redeem $2billion from the PIMCO space in addition to other redemptions from PIMCO, we took the opportunity to increase our exposure to the asset class. We were able to pick up some merchandise, never as much as you want, at very competitive prices.
News that CalPERS was divesting from hedge funds, though, didn’t have as much effect on our portfolio. At the Employees’ Retirement System Of Texas, we won’t be following suit as we have a very different way of working with hedge funds.
We have been using them to reduce risk, enhance returns, access niche markets and to diversify current allocations.
Our absolute return portfolio has generated an annualised return of approximately 7.2% with 2.6% annualised standard deviation. We’re also making savings through fee negotiations in excess of $15 million since inception of the programme in August 2012. So we’re getting what we want out of hedge funds.
To join the conversation and air your views, Tweet us @amoderninvestor using the hashtag #InvestorChallenge