By David Barry
Seeking to diversify its portfolio, The Firemen’s Annuity & Benefit Fund of Chicago is for the first time adding managers focused on private credit and infrastructure.
The $1.1 billion FABF has issued request for proposals for investment advisors to manage a $30 million mandate for private credit and a $32 million mandate for infrastructure. Both mandates individually represent 3% of the total fund. FABF said multiple managers will be considered for each mandate.
To be considered for the credit fund, a manager had to be raising at least a $1 billion fund with a closing date through December 31. Targeted strategies could include direct lending, structured credit, distressed/special situations, specialty finance and multi-strategy. Fund-of-funds products are not being considered. The board is seeking to select a manager or managers in the July/August timeframe.
For the infrastructure mandate, the manager should have assets under management of at least $2 billion and be diversified. Like with the credit mandate, a fund-of-funds product will not be considered. The board will seek to select an infrastructure fund or funds to invest in during the May/June period.
The fund’s consultant, Callan LLC, is overseeing these processes with FABF’s staff. The decision to add private credit and infrastructure segments came after the fund’s board participated in education sessions on the segments in 2021.
As of December 31, FABF had a policy target of 35% to U.S. equities, 25% to non-U.S. equities; 20% to total fixed income; 8% to real estate; 4% to both private equity and liquid diversifying; and 2% to both commodities and Treasury inflation-protected securities. FABF’s board did vote to change the allocation in December, but the new allocation was not spelled out in minutes from that meeting. Lorna Scott, the fund’s chief investment officer, did not return a message seeking further clarification.
In 2021, FABF saw its investments rise 14.2% net of fees and add approximately $129 million to its balance sheet.