The Fairfax County Supplemental Retirement Fund, Fairfax, Va., put two managers on its watch list. At its investment committee meeting June 4, trustees of the $1.4 billion-plus system put Morgan Stanley, a small-cap equities manager, on watch ``partly because of performance, partly because they just changed their manager,'' Robert C. Carlson, chairman. Morgan Stanley runs about $44 million.
Also put on watch was BEA Associates, which is managing a $107 million U.S. large-cap equity portfolio that has underperformed for three of the last seven years, said Don McCorry, acting executive director. The system staff will recommend at the next investment committee meeting in September whether the two managers should be terminated.
BEA also manages fixed income for the fund, ``but that is not a concern,'' Mr. McCorry said.
Fidelity Investments dropped fees for its $57 billion Magellan flagship fund again, based on the fund's underperformance vs. the S&P 500. Magellan is among the Fidelity funds that charge a sliding fee, which is adjusted depending on fund performance compared to a benchmark.
Fidelity announced in its monthly fund report that the average management fee in the 12-month period ended March 31 dropped to 45 basis points from an average of 73 basis points for the year ended March 31, 1996. Fidelity said last month that Magellan's total fees dropped 33% last year to $245 million from $366 million in 1995.
Magellan returned 13% for the year through June 10 vs. the S&P 500's nearly 17% for the same period.
Transwestern Investment Co. acquired a 50% interest in a portfolio of Houston properties owned by CIGNA Investment Management for an undisclosed price. Properties in the portfolio are four office buildings and one service center/flex property, which together make up more than 1 million square feet of space and are part of TIC's Transwestern Office Partners II L.P. Fund. Transwestern said the assets fit well into the acquisition program for its Transwestern Office Partners II institutional partnership, targeted for $150 million of equity.
The CIGNA portfolio increases TIC's total acquisitions during the last nine months to approximately 2.7 million square feet.
The University of New Mexico endowment, Albuquerque, plans to increase its international allocation by the end of the year as a result of an allocation study. C.W. Vickers, endowment manager, said the $140 million fund will boost international equities to 20% of total assets from the current 10%. The increase will go to Scudder, Stevens & Clark, which manages the international portfolio now.
The fund will decrease its fixed-income allocation to 30% from 40%. Loomis Sayles and Fiduciary Trust, will split the reduction and continue to divide evenly the fund's fixed-income management.
The fund hopes to complete the changes by Dec. 31. Mercer Investment Consulting is assisting.
