US - The Chicago-based Illinois Teachers' Retirement System (TRS) has taken what it calls "significant investment actions" in a move that sees managers running US$2bn terminated, US$1.3bn reallocated, BlackRock's US$1.7bn placed on watch and a search for a passive manager.
In December the US$21bn fund:
- Adopted a fixed income structure that implements earlier decisions to downsize the portfolio and make additional allocations to domestic equity, real estate and private equity. The board terminated the US$675m domestic fixed income mandate of Chicago Capital Management and the US$612m international fixed income mandate of Julius Baer as part of the downsizing. Chicago Capital was initially funded in December 1995. Baer was initially funded in July 1992.
- Terminated the US$636m large cap value mandate of Alliance Bernstein Institutional Capital Management. The firm was on the watch list due to concerns regarding pending Enron litigation.
- Allocated approximately US$415m each to Bear Stearns and Boston Partners for domestic large cap value mandates. Callan Associates assisted in the search. The source of funds was the Alliance Bernstein account and the reallocation of assets from fixed income.
- Allocated approximately US$152m each to Mazama Capital Management and J&W Seligman for investment in smid cap growth mandates. The source of funds was reallocation of fixed income assets. Callan Associates assisted.
- Authorised a search for an index funds provider. The current provider, State Street Global Advisors will be invited to tender a proposal. As of 30 September 2002, SSgA managed approximately US$3,663m in passive products for TRS. Potential proposers may contact the Chicago office of Callan Associates.
- Allocated US$75m to the Carlyle/Riverstone Global Energy and Power Fund II. The source of funds was cash flow.
- Allocated US$50m to the Evercore Capital Partners II. The source of funds was cash flow.
- Terminated a US$102m large cap growth mandate managed by Oak Associates for performance reasons. Oak was initially funded in March 2000. Funds will be allocated to MFS, an existing large cap manager.
- Extended the contract of general consultant Callan Associates for a three-year period. The firm was rehired in December 2001 following the resignation of Strategic Investment Solutions.
Illinois has also placed BlackRock Financial Management on watch for performance reasons. The firm manages a US$1.7bn domestic fixed income portfolio. Maintained on watch list status are: Ariel Capital’s US$202m small cap value assignment, due to the departure of key personnel; Payden & Rygel’s US$689m domestic fixed income mandate, due to performance reasons; and Weiss, Peck & Greer’s US$697m in domestic fixed income, again for performance reasons.
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