After the financial crisis reduced the city of Nashville's now-$2.8 billion pension fund by almost a quarter of its value, CIO Fadi BouSamra became a determined investor in alternative fixed income. "We accepted that we had to do things differently than in the past since the plan was getting relatively large in proportion to the city's budget," says BouSamra, 46, who fell in love with Tennessee's Music City as an undergraduate business student at Belmont University in the early '90s. "We can still achieve good risk-adjusted returns in the U.S. residential loan market and commercial bridge loans. The U.S. energy industry is providing an opportunity for rescue financing and outright asset purchases from overlevered balance sheets." Since 2008, BouSamra has halved the city's once-79 percent allocation to equities and added a couple of dozen alternative fixed-income funds for a 17 percent allocation. During the past decade the fund has achieved its goal of delivering a 7.5 percent annualized return; its five-year return is 11 percent.
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