"Distressed opportunity periods are cyclical in nature, and some are predicting that a new wave may be on the horizon," said Michael Burns, Chief Executive Officer. "The Board believes that by making a specific commitment to a fund of distressed investment specialists now, the APFC will be prepared to take advantage of opportunities that may appear."
Distressed investments arise when companies are in trouble, and can bring increased returns with some corresponding risk. The Fund currently has exposure to distressed investments of approximately $50 million in private equity and $150 million in the absolute return portfolio. Like private equity, the allocation would only be invested as opportunities arise and would remain invested in bonds in the interim. Crestline was the first absolute return manager hired by the APFC in 2004, and they currently manage $581 million in the Fund's absolute return strategies portfolio.
The Board hired three new managers to complete the 14 percent allocation to global stocks created last September. AllianceBernstein, L.P., GMO LLC and AQR Capital Management, LLC, were each given a $500 million allocation. Four Fund managers were assigned to the global allocation last fall: two existing global managers, and two Fund managers that were authorized to expand to global mandates.
The Board's next scheduled meeting is May 30- 31.