San Diego County Selects Integrity Capital as Outsourced CIO

September 3, 2009 ( - The San Diego County Employees Retirement Association (SDCERA) has contracted with Integrity Capital, led by Lee Partridge, to serve as Portfolio Strategist.

According to a SDCERA news release, the Portfolio Strategist will guide the system’s asset allocation, manager selection and portfolio construction, implement board-approved policy, and will report to CEO Brian White and the Board of Retirement. The Board of Retirement will retain its control of investment and allocation decisions.

Partridge most recently served as Deputy Chief Investment Officer for the $83 billion Teacher Retirement System of Texas (see Texas TRS Announces New Deputy CIO ). The news release said he left last month to form Integrity Capital, a consulting practice dedicated to managing institutional investment portfolios.

Though the system’s decision to outsource the CIO function was met with some controversy by several board members, it was approved with a $1.4-million compensation plan last month (see San Diego County Approves $1.4M Comp Plan for Outside Investment Consultant ). Most board members said added investment earnings would make up for the increased compensation and the system needs to be innovative to compete with private-sector money managers.

Under the contract, SDCERA will pay Partridge a base management fee of 0.85 basis points of assets under management (AUM), or approximately $535,000 based on current assets. If Partridge meets certain milestones, he may be eligible for a performance fee of up to 0.85 basis points of AUM.

Milestones include meeting or exceeding the fund’s assumed rate of return of 8.25%, which equates to an increase of at least $520 million based on current assets.

SDCERA provides retirement benefits for approximately 35,000 eligible employees, former employees who are vested, and retirees of the County of San Diego.