Mass. state fund chief leaving for hedge fund firm

Date: Wednesday, May 26, 2010
Author: Reuters

The executive director of Massachusetts' $44 billion state pension fund, one of the first to make big bets on hedge funds, is resigning and moving to a Chicago-based asset management firm.

Michael Travaglini, 47, who has headed the state fund for six years, will join Grosvenor Capital Management LP in July as a managing director. He will market the firm's portfolios to public pension funds.

Grosvenor, a fund of hedge funds firm that helps select a portfolio of hedge funds for clients, is one of a handful that Massachusetts uses to make its bets in the loosely regulated $1.6 trillion hedge fund industry. Hedge fund investments have significantly boosted the state fund's returns over the last few years.

When Travaglini, a trained lawyer, arrived from Boston-based asset manager Putnam Investments in 2004, the state fund had $32 billion in assets.

State Treasurer Timothy Cahill, who chairs the Pension Reserves Investment Board, praised Travaglini for guiding the pension fund through the financial crisis.

"He reduced risk while maximizing gains to the benefit of taxpayers and retirees. In calendar year 2009, the pension fund returned a robust 18 percent and continues to climb," Cahill said in a statement.

Travaglini announced his plans on Tuesday at a time when state lawmakers are considering curbs on pay for state employees.

One proposal would make the governor, who earns $143,000, the state's highest-paid employee. Currently the pension fund's executive director earns more than twice as much as the governor.

Another proposal would block bonuses for fund employees in years of investment losses, no matter how the portfolio performed against its benchmark.

Money managers in the private sector, including hedge fund managers, earn significantly more than those in the public sector; public funds and endowments have long argued that they need to deliver high salaries in order to attract qualified candidates.