The $6bn Municipal Employees' Annuity and Benefit Fund of Chicago has appointed Northern Trust Global Investments to run a $380m S&P 500 index fund brief.
James Mohler, senior investment manager at the fund, said that funding for Northern Trust's mandate will come from terminating two managers, and reducing the funding of another. Chicago Asset Management has had a $200m active US large cap value equities mandate removed, whilst Weiss Peck & Greer has been dropped from a $60m US large cap core equities brief.
The pension fund will also reduce Deutsche Asset Management's (DeAM) S&P 500 index fund mandate, in order to pay for the remaining $120m that has been allocated to Northern Trust. DeAM's mandate will now be approximately $600m, 10% of the pension fund's total assets, according to Mohler.
Mohler said that the fund's board of trustees had approved Northern Trust's selection and that contracts were now being negotiated. He also said that the manager changes were the result of an asset liability study (ALS) that the fund conducted in the first quarter of 2000.
Additionally, Mohler revealed that the fund had made a raft of commitments to alternative investment funds, due to the ALS. The fund will commit $40m to the Capri Capital Advisors Apartment Fund III; $25m to the Midwest Mezzanine Fund; $18m to the Meisrow Partnership II; $18m to the Meisrow Capital Partners VIII fund; and $25m to the First Analysis Private Equity Fund IV.
Funding for the alternative investment fund mandates will come from investment income, according to Mohler. Becker Burke Associates are the fund’s consultants.
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