SD County Fund Dumps Adviser in Wake of Hedge Fund Loss

October 26, 2006 ( - San Diego County's pension fund has severed its ties with its investment consultant in the wake of its recommendation to invest in an ill-fated hedge fund in which the fund ultimately lost an estimated $105 million.

Officials from the San Diego County Employees Retirement Association, the independent agency that manages the county’s $7.3 billion pension fund, said they were no longer working with Connecticut-based Rocaton Investment Advisors, LLC, according to a North County Times news report.

Rocaton, the fund’s primary investment adviser for four years, recommended it take a $175-million position in Amaranth Advisors – the hedge fund that suffered a $6-billion loss on an incorrect bet on natural gas prices (See  San Diego Retirement Fund to Feel Hit from Hedge Fund Collapse ).

The fund’s latest $105 million estimate of the Amaranth loss represents an increase from a figure officials put out about a month ago – $87 million. (See  SD County Pension Nearly Doubles Loss Estimate from Amaranth Collapse ).

The newspaper reported that fund executive director Brian White would not detail how its Rocaton contract came to an end.   “We had discussions internally with Rocaton, and all concerned felt it was prudent to wrap up the relationship,” White told the newspaper. “That’s all I’m going to comment on this.”

Association officials have said several times since the Amaranth collapse in September that the investment loss would not hurt the $7.3 billion pension fund, which is responsible for covering the retirement benefits of 34,000 active and retired county workers.

White said the $175 million investment represented less than 2% of the pension fund’s total worth. White also said the pension fund expects to earn more than $400 million in investment earnings this year, even after the Amaranth loss.