US - The Illinois State Board of Investment is considering whether to reallocate part of its non-US equity portfolio to dedicated emerging market managers.
ISBI chief executive William Atwood said the board was in discussions over whether using managers based in the markets being invested in was more beneficial than using their US-based counterparts.
He said investing in emerging markets required local expertise and could not be done effectively by someone "sitting at a desk on Wall Street".
The fund has 20% of its portfolio in non-US equities managed by firms including LSV Asset Management, State Street Global Advisors, Vontobel, Franklin Templeton and Globeflex. At present, a maximum of 20% of its international allocation can be invested in emerging markets.
"The internal discussion we are having now is do we want to continue with that structure where our non-US managers are just general managers, or do we want to carve out a portion of that non-US portfolio and higher dedicated emerging managers. That's an internal discussion which has not been resolved yet," Atwood told GP.
"There is a school of thought, which I personally agree with, that investing in emerging markets...requires local expertise and a very focused approach.
"I'm not confident a portfolio manager sitting at a desk on Wall Street can say ‘right now I'm going to work my domestic equity portfolio and this afternoon I'll work on my Brazilian portfolio'. I think we need the local talent - or at least talent that is highly focused and has the specific expertise those markets require."
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