US - The US$113bn California State Teachers' Retirement System (CalSTRS) has launched a tender for up to six enhanced index managers for the US$3.7bn enhanced portion of its domestic equity portfolio.
Enhanced index management, which is included in active management, is part of the the $57.8bn domestic equity portfolio.
CalSTRS said it could also establish a pool of qualified investment management firms for future additions to or replacements for the selected managers.
The enhanced index managers will seek a moderate return over a stated index, such as the S& P500 or a Russell index, and selected firms will have full discretion to manage their mandates utilising stock-based strategies, derivative-based strategies or a combination of both.
CalSTRS global equities and operations director Elleen Okada said enhanced index strategies provided an ideal method of generating higher returns without significantly increasing risk. “Enhanced indexing is neither active nor passive management so we get the best of both strategies while adding value to our bottom line,” he said.
This request for proposal came about as the result of a 2003 CalSTRS investment committee decision to increase the active management portion of the domestic equity asset allocation from 20% to 30%.
Deadline for proposals is November 10 with appointments due before mid-2006.
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