US - CalPERS, the $155bn California Public Employees Retirement System, is looking for a manager to run a $19.2bn international equities mandate.
CalPERS' investment staff and its consultant Wilshire Associates are searching for a manager to handle $19.1bn worth of CalPERS pension fund assets and $94m for four affiliate funds. All five accounts are to be managed passively against international equity indices.
Wilshire and CalPERS have identified six firms from a list of 20 that they believe could satisfactorily run the mandate. Only those six firms will be invited to apply for the mandate. The chosen firms are Alliance Bernstein; Barclays Global Investors; Deutsche Asset Management; Mellon Capital Management; Northern Trust Global Investments; and State Street Global Advisors.
Due to the sheer size of the mandate, CalPERS and Wilshire believe that the list of candidate firms that could run the portfolio is very limited, hence the invitation only search. The six firms were chosen as they each passively manage more than $1bn in institutional (US tax-exempt) non-US international equity products, designed to track the most widely recognised non-US broad market international equity indices.
Two other key considerations for the fund were the candidate's ability to reduce CalPERS' transaction costs when assets are withdrawn or allocated to its account, and its ability to provide CalPERS with in-house proprietary research.
The incumbent manager, SSgA has held the mandate for over a decade. Initially funded on July 1, 1989, SSgA retained the mandate when it was put out to tender in July, 1994. SSgA was awarded a five-year contract, which has since been extended three times. The current contract expires June 30, 2002.
Additionally, the fund's investment committee has approved a policy to target 2% of CalPERS' total assets to under-served areas in California. Funding for the new policy will come principally from CalPERS' private equity, real estate and domestic fixed income portfolios. The new policy will be incorporated into the pension fund's existing economically targeted investment (ETI) policy that was adopted in February last year.
By Geoffrey Ho
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