Retirement fund authorizes transfer

The trustees for the Arkansas Teacher Retirement System on Monday authorized transferring about $164 million managed by a New York-based investment manager from one fund into two other funds.

System Executive Director George Hopkins said moving funds from the Pershing Square L.P. fund to the Pershing Square Holdings Ltd. fund and the Pershing Square International Ltd. fund will reduce certain fees and potentially increase investment returns.

The system’s investments were valued at about $11.7 billion on Sept. 30, he said.

Pershing Square has been an investment manager for the system since mid-2008.

The firm invests in large United States companies that are underperforming and provides advice to improve their earnings, the system staff said in a report to the trustees. It has produced an annual investment return of more than 12 percent.

Pershing Square notified investors earlier this year that it would be launching Pershing Square Holdings Ltd. with the intention of eventually making it a publicly traded, closed-end fund through an initial public offering that won’t happen until mid to late 2013 at the earliest, according to Chicagobased investment consulting firm Hewitt EnnisKnupp.

The purpose of the new fund is to raise “permanent capital” not subject to constant investor flows, but there will be no change in investment strategy and the portfolio will mirror that of the private funds in which the system is now invested, Hewitt EnnisKnupp said.

As an incentive to the partners to convert to the new fund, Pershing Square cut the share of the profits that it would get from 20 percent to 16 percent and increased the share that its partners, such as the system, would get from 80 percent to 84 percent, Hopkins said.

The system would put as much of the money from the current fund into the new fund as it is allowed by Pershing Square, and the rest would go into Pershing Square International Ltd., which is an exact duplicate of the current fund, he said.