The $15.3 billion pension fund terminated the manager as a result of the change in the high-yield target to 7% from 15% that the board approved at its June 28 meeting. As a result of the smaller target, the board at its meeting on Wednesday voted to reduce the number of high-yield portfolios to four from five. General investment consultant Wilshire Associates' analysis said the "optimal manager mix did not include PENN Capital," according to Mr. Graham,
"The reduced allocation to high yield was the sole reason for this action. OP&F staff and board have been pleased with PENN Capital's performance and service," Mr. Graham added.
The remaining high-yield managers are Loomis, Sayles & Co., which runs $472 million; MacKay Shields, which manages two distinct portfolios totaling $773 million; and Neuberger Berman, which manages $504 million.
Part of the reduced target went to a new 5% target to private credit, which was previously included in the high-yield target. The pension fund currently has $226.1 million invested with five private credit funds.