Indiana voters yesterday approved a measure allowing equities to be bought by state pension funds, opening the door to gradual but potentially big changes at the two largest state funds. Similar measures failed in 1986 and 1990.
Garth Dickey, executive director of the $5.3 billion Indiana Public Employees' Retirement Fund, Indianapolis, said as a first investment, his fund probably will move about $300 million in fixed income to an equity index fund managed by an existing manager.
Robert Newland, investment officer with the $3.4 billion Indiana State Teachers' Retirement System, Indianapolis, said the board is likely to send out RFPs for a consultant to assist with the move into equities. RFPs could go out possibly around the first of the year. After that, asset liability studies and asset allocation reviews will be conducted, followed by manager hirings.
Indiana Employees' already hired Mercer to assist Burnley Associates with an asset allocation review, Mr. Dickey said. The board will decide on its next step next week after Mercer presents its results, he said.
Rohr Inc., Chula Vista, Calif., made a $48 million stock contribution and a $4 million cash contribution to its $500 million pension fund, resulting in a number of asset allocation changes, said Ken Scholz, treasurer.
Because the contribution of company stock increased the fund's allocation to small-cap stocks, fund officials decided to add the $4 million cash contribution to existing portfolios in other asset classes. Hotchkis and Wiley received an additional $1 million in large-cap stocks; Lincoln Capital, $1 million in bonds. An additional $2 million was earmarked for international equity, with Capital Guardian Trust getting two-thirds of that and Hotchkis and Wiley, one-third.
As a result of the contributions, the Rohr pension fund is now fully funded.