Dear Mayor Glover:
Your request for an Attorney General's Opinion has been assigned to me for research and reply. On behalf of the Board of Trustees for the Police Pension Fund of the City of Shreveport (Board), you have asked for our opinion as to whether the Board may invest in alternative investments/hedge funds.
Your request indicates that the Board has been presented with opportunities to invest in alternative investments/hedge funds. Advisors to the Board have recommended these investments as a prudent course of action. However, the list of investments in La.Rev.Stat. 11:3719 in which the Board may invest funds does not include these alternative investments/hedge funds. You have asked for our opinion as to whether the list of investment vehicles in La.Rev.Stat. 11:3719 is an exclusive list limiting the Board to invest in the listed items only, or is the list an illustrative list allowing investments in other items not listed.
La.Rev.Stat. 11:3719 provides the following:
§ 3719. Investment of fund
A. The board may invest the permanent fund or any portion thereof in the name of the "Board of Trustees of the Police Pension and Relief Fund" in interest bearing bonds of the United States of America, or the state of Louisiana, or of the said city of Shreveport, Louisiana; federally insured banks or savings and loan associations; industrial bonds; utility bonds; preferred securities; railroad equipment trust certificates; first mortgage loans which shall be limited to ten percent of the issuing company's admitted assets; real estate first mortgage loans on unencumbered real estate, which shall be limited to seventy-five percent of the appraised valuation of the real property; bank certificates of deposit of any accredited state or federal bank operating in Louisiana, provided full collateral is *Page 2 submitted and maintained by the city under the terms of its local fiscal agency agreement; repurchase agreements; securities of any accredited building and loan association or savings and loan associations which is [sic] located in the state of Louisiana, provided such investment amount is fully insured by the federal government; mutual funds which have official representatives domiciled in Louisiana; and common stocks of any major company which is fully solvent and/or registered on a major securities exchange.
B. The board shall have full power to diversify the investments of the funds, in any of the above investments or securities which the board deems prudent and advisable. The board shall have full power to hold, purchase, sell, assign, transfer, and dispose of any of the securities and investments in which any of the funds created herein shall have been invested. The board shall manage the funds with the care, skill, prudence, and diligence, under the circumstances then prevailing, that a prudent man, acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
In our view, the list of investments provided for in La.Rev.Stat. 11:3719 is an exclusive list. As such, it is our opinion that the Board can only invest in the listed vehicles. Section (B) of La.Rev.Stat. 11:3719 specifically states that the Board has the authority to diversify the investments of the funds "in any of the above investments or securities". We believe this language expressly limits the vehicles in which the Board can invest.
We trust this adequately responds to your request. If you should have any questions about the response contained herein, please feel free to contact our office.
Yours very truly,
JAMES D. "BUDDY" CALDWELL ATTORNEY GENERAL
BY:___________________ MICHAEL J. VALLAN Assistant Attorney General
JDC/MJV/crt