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.