California State Teachers' Retirement System will funnel an estimated $29 billion into equity and global fixed income. The $68 billion fund will eliminate about $25.16 billion in U.S. bonds, in favor of $17.7 billion in global bonds. Another $2.72 billion in global TAA will be eliminated, and cash will be reduced $1.36 billion. About $11.52 billion will be moved into equities and equity-related categories. Some current money managers could be eliminated by the changes, but opportunities for hirings also are expected.
Trustees in July will begin considering whether the $17.7 billion slated for global bonds will be internally or externally managed. At the board's next meeting, a $7 billion TAA fund could be cut back or eliminated.
SBC Communications Inc., San Antonio, Texas, is converting its non-union and management employees to a cash balance plan June 1. SBC will modify the benefit formula in the $9 billion defined benefit plan to provide cash balance accounts for non-union workers. Asset management and asset allocation will not be affected by the conversion, according to a company spokesman.
Brooklyn Union Gas Co., New York, and Long Island Lighting Co., Hicksville, N.Y., formed a transition team to study the implications of a merger on their pension funds. Thomas M. Riordan, manager-pension trust administration, couldn't say if the plans eventually would be merged and doesn't expect any preliminary decisions until late summer. Deloitte & Touche is assisting on various corporate aspects of the merger, including the pension funds.
Brooklyn Union has about $650 million in defined benefit assets and $150 million in 401(k) assets. Long Island Lighting has about $700 million and $200 million, respectively.
California Public Employees' Retirement System real estate subcommittee received 13 responses out of 490 proposals issued during its search for apartment money managers. The $110 billion fund's legal office and contracts department are still reviewing the returned proposals. A preliminary review indicates none of the responding firms qualify as minority, women or disabled veteran businesses. However, managers selected by the Sacramento fund wouldn't have to meet the minority, women and disabled veteran requirements until funded with assets to manage.
