Santa Barbara County (Calif.) Employees’ Retirement System will search for domestic core and core-plus fixed-income managers and a direct lending manager in the coming months as the result of a fixed-income structure study, said Ellen Hung, assistant CEO, in an email.
The $2.6 billion pension fund’s board approved the searches at a meeting Wednesday following the presentation of the fixed-income structure study by investment consultant RVK. The structure study was the result of a new target asset allocation established in September that saw the slight reduction of the overall fixed-income target to 28% from 30%.
Among the changes is the termination of international fixed-income portfolios managed by BlackRock (BLK), which ran a $75 million passive strategy, and Brandywine Global Investment Management, which ran $24 million in an active strategy. Also, an existing $99 million intermediate government bond index commingled fund managed by BlackRock will be converted to an intermediate U.S. aggregate index commingled fund “for broader exposure,” a news release said.
The board approved issuing RFPs for the core- and core-plus managers and an invitation to bid for a direct lending manager. Current core and core-plus managers Reams Asset Management, STW Fixed Income Management and Schroder Investment Management will all be invited to rebid. Ms. Hung did not provide information on the size of the current managers’ portfolios and said the amounts for the chosen managers will be determined following the manager hires.
“The structural changes are aimed at increasing returns and reducing risk, and does not reflect on the performance or service of the affected investment managers,” Ms. Hung said in the news release.
An RFP is an open search, while an invitation to bid “will involve a pre-screen to make sure minimum qualifications are met,” Ms. Hung said in her email.
The RFPs will be posted on the pension fund’s website.