SPRINGFIELD, Ill. - Thomas Zimmerman, chief investment officer for the $12 billion Teacher Retirement System of Illinois, is resigning effective Aug. 31 to open his own currency overlay and stock and bond hedging firm.
Mr. Zimmerman ran a portion of the retirement system's currency overlay and hedging program in-house. His company - Zimmerman Investment Management Co. - will receive the $40 million assignment on an interim basis, according to Robert Daniels, chief executive officer.
The retirement system expects to issue a request for proposals next month for a hedge and currency manager, and Mr. Zimmerman said he will respond.
The retirement system's in-house hedging program consists of stock index futures, bond futures and the currency component of a portion of the fund's international exposure.
The international portfolios to which Mr. Zimmerman provides currency management are managed by Daiwa International Capital Management Corp. and Clay Finlay Inc., both of New York. There is also an international index fund.
Mr. Zimmerman's hiring apparently does not violate the system's policy on professional services by former employees. That policy forbids the hiring of a key employee for a period of one year unless the hiring ensures the continued effective operation of the retirement system, or prior to the hiring, a board of trustees subcommittee issues a written statement detailing why the hiring is necessary.
A memo was issued by the subcommittee June 16 recommending the hiring of Mr. Zimmerman, concluding "it is not in the system's best interest to assign the management to another unknown firm effective upon Tom's resignation."
According to data suppled by the system, Mr. Zimmerman is outperforming its other currency overlay managers - RXR Group, Stamford, Conn., and A.G. Bisset & Co., Rowayton, Conn.