Hartford Revamps Small, Smid-Cap Portfolio; Makes Commitments
The $1.1 billion City of Hartford (Conn.) Municipal Employees’ Retirement Fund has revamped its domestic small-cap and small- to mid-cap equity portfolios and also made opportunistic credit, real assets and real estate debt commitments, CIO Gary Draghi said.
The plan approved investments of $20 million each with domestic small-cap core manager Matarin Capital Management, domestic smid-cap value manager Channing Capital Management and smid-cap growth manager Columbus Circle Investors at its June 8 meeting, Draghi said.
The firms were selected as part of a restructuring of the small-cap and smid-cap portfolios, which previously consisted of a $26 million allocation with small-cap growth manager Voya Investment Management and a $24 million smid-cap value allocation with SouthernSun Asset Management, which were terminated.
The remainder of the new allocations will be funded through a rebalancing of the plan’s large-cap portfolio, Draghi said.
The plan decided it wanted a core manager to handle the entire small-cap portfolio as well dedicated smid-cap value and growth managers, as SouthernSun had more of a core approach than deep value, he said.
The plan hired Matarin because the firm’s core strategy invests in companies at the lower end of the small-cap spectrum, while Channing and Columbus Circle’s strategies have exposure to companies at the larger end of the smid-cap spectrum, Draghi said.
The plan also filled out its new opportunistic credit allocation at the June meeting, making commitments of $8 million each to Sound Harbor Credit Solutions Fund II and VWH Capital Management, Draghi said.
VWH is a first-time fund that invests in pools of non-performing loans, while Sound Harbor invests in middle-market businesses to fund balance sheet restructuring needs and strategic growth initiatives, according to their respective websites.
The plan created a 3% target allocation to opportunistic credit last year (fin|daily, 2/9; 9/12).
Additionally, the plan made commitments of $8 million each to Private Advisors Real Assets Fund II and Riverstone Credit Partners II, Draghi said. The plan had invested with both firms’ predecessor funds (fin|daily, 3/9/17; 3/18/16).
Lastly, the plan made a $6 million real estate investment in women-owned Basis Investment Group‘s BIG Real Estate Fund I, which fills a real estate debt sub-allocation within the plan’s real estate portfolio, Draghi said.
General investment consultant NEPC assisted with the hires, which are all subject to successful contract negotiations.