Sen. Barbara Boxer's legislation limiting 401(k) plan investments in employer stock, as expected, has been tagged on as an amendment to the tax package moving through the Senate this week. But the legislation has been so watered down employers no longer see it as a threat, and it stands a good chance of passage. The bill forbids retirement plans from having more than 10% of assets in employer securities if companies do not give their workers a choice in how to invest the money. The provision does not apply if employees choose to buy company stock. Nor does it apply to employer matches or ESOPs.
Louisiana lawmakers, as expected, approved legislation this week that would allow the Louisiana State Employees' Retirement System, the Teachers' Retirement System of Louisiana and the Louisiana School Employees' Retirement System to hike their equity exposure to 65% from the current cap of 55%. But the additional 10% will have to be invested in an S&P 500 index portfolio.
The systems could pull out of the index fund, if the index drops 10% or more in a 12-month period, but would have to reinvest if the index moves back up, said Linda Nugent, analyst for the Louisiana Senate Retirement Committee. The indexing strategy has to be in place by the end of fiscal 1998. The bill now goes to Republican Gov. Mike Foster for his signature.
The Louisiana Police Pension and Retirement System could increase its equity exposure but still needs legislative approval. Also, lawmakers put off action on a bill that would let the state float pension obligation bonds.
California Institute of Technology's investment committee approved a new asset allocation policy that commits 25% of equity to alternative investments - up from only a small amount before, said Treasurer Philip Halpern. Much of the funding for alternatives will come publicly traded equities. The Pasadena-based university has about $1.3 billion of endowment and foundation assets.
The new allocation calls for 80% equity and 20% fixed income from 75% equities and 25% fixed income. A decision on how to implement the strategy is likely this summer, he said.
Oregon Public Employes' Retirement Fund, Salem, will invest $50 million in HSBC Private Equity Fund 2. This is Oregon's first direct investment in private equity in the Far East, said Jay Fewel, equities manager. HSBC now has $350 million committed to the fund. Other investors include: Colorado Public Employees' Retirement Association, Denver, $100 million; the BellSouth Corp. pension fund, Atlanta, $75 million; the Weyerhaeuser Co. pension fund, Tacoma, Wash., $50 million; and the pension fund of Pacific Telesis Group, San Francisco, $25 million.
PECO Energy Corp., Philadelphia, hired Fidelity Institutional Retirement Services to provide record keeping, employee education and some investment management for its $410 million 401(k) plan. PECO previously handled record keeping and trust activities internally. New investment options are the Putnam Equity Income Fund, Fidelity Spartan U.S. Equity Index Fund, Templeton Foreign Fund and the Franklin Small Cap Growth Fund. PECO retained its existing seven funds and shifted to daily valuation from quarterly.
Pennsylvania Public School Employes' Retirement System, Harrisburg, invested in two real estate funds. The $33 billion fund invested $150 million in LF Strategic Realty Investors II and $50 million in Security Capital Group's private REIT. Institutional Property Consultants assisted.
University and Community College System of Nevada, Reno, hired Pacific Investment Management to run $51 million in U.S. and non-U.S. bonds. It terminated Sanford C. Bernstein, which ran $43 million in U.S. core fixed-income and an $8 million non-U.S. bond portfolio run by The Common Fund.
The Common Fund continues to run $50 million in equities for the endowment fund and the system's operating fund. Hiring PIMCO helps consolidate the bond portfolio and saves on fees, said Tim Ortez, director of banking and investments for the $180 million endowment fund. Cambridge Associates assisted.
Carnegie United Kingdom Trust, Dunfermline, Scotland, terminated its sole manager, Schroder Investment Management Ltd. and hired Glasgow Investment Managers Ltd. to run the £29 million (U.S. $48 million) portfolio, said John Naylor, secretary and treasurer of the fund. The bulk of Glasgow's mandate will be in U.K. equities.
``We weren't happy with the performance of Schroders,'' said Mr. Naylor.
An official at Schroder declined to comment.
Evangelical Lutheran Good Samaritan Society, Sioux Falls, S.D., hired Piper Capital as administrator and manager for its $30 million Short Asset Management Fund, a cash portfolio. Piper also will administer the $220 million Helping Hands Fund. Piper replaces Voyageur Asset Management, which sold its administrative business. Voyageur continues to run $50 million in long-term bonds for Helping Hands. Merrill Lynch assisted.
The two funds invest money for the society's centers, nursing homes and central office