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Bailey McCann, Opalesque New York:

Hedge fund Davidson Kempner Capital Management has asked Kentucky's pension fund to redeem its $68.7 million investment because of changes in how the pension fund is handling its relationships with investment managers.

The Kentucky Retirement System is one of the most underfunded pension systems in the country and recently, the state has taken steps to scrutinize its investment portfolio, cut fees, and try to improve performance. However, an article in the Lexington Herald says that at least one investment manager isn't having it. At issue is a new rule that would require private funds to hold themselves to the ethics guidelines of the CFA. Davidson Kempner doesn't maintain an affiliation with the CFA.

As written, Kentucky's guidelines require fund managers to put client interests first and make prudent investment decisions.

Reportedly, Davidson Kempner is also concerned about being the target of future litigation from plan participants. Kentucky pensioners brought suit against a group of funds in the pension last year citing high fees and middling investment performance. Davidson Kempner was not targeted in that suit but other hedge funds the pension invests in were.

The article also notes that some private equity firms have pushed back on ......................

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