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Illinois Teachers cuts 3 active equity managers

Illinois Teachers ' Retirement System, Springfield, terminated three equity managers running a total of $699 million for the $47.3 billion fund.

MFS Institutional Advisors was terminated for performance reasons for the $638 million active U.S. large-cap core portfolio it managed for the retirement system since October 2010, Bill Thomas, investment officer for global equities, during an investment committee meeting of the board on Wednesday.

Daniel Flaherty, an MFS spokesman, declined to comment.

Lombardia Capital Partners was terminated for a $33 million active international large-cap value account because of organizational concerns. American Century Investments lifted out the Lombardia investment team, led by portfolio manager Alvin Polit, in March.

Mr. Thomas told trustees that TRS investment officials became worried about the impact on performance as assets grew through the marketing efforts of American Century Investments, which Mr. Thomas said is known as an "asset gatherer."

Also cut was Affinity Investment Advisors for underperformance of its $28 million active U.S. large-cap value strategy, Mr. Thomas said. Gregory R. Lai, Affinity's principal, CEO and lead portfolio manager, did not respond to a call seeking comment.

The Lombardia and Affinity strategies both were funded from TRS' $700 million emerging managers program; the assets will be returned to the EM pool.

Trustees ratified the terminations at a board meeting on Thursday.

Also at the June 21 meeting, Becky Gratsinger, CEO of the investment consultant RVK, said the fund's annualized net-of-fees returns for the periods ended March 31 were: three months, 4% (benchmark, 3.9%); one year, 10.9% (10.3%); three years, 5.7% (6.4%); five years, 8.1% (8.4%); 10 years, 5.1% (5.5%); and 20 years, 7.3% (7%).