2 DUMP WR LAZARD
Trustees of two public pension funds voted last week to terminate WR Lazard as a fixed-income manager.
The $20.6 billion New York City Teachers Retirement System terminated Lazard as manager of a $262 million government bond portfolio. Lincoln Capital Management, an existing government bond manager for the fund, will take over the portfolio.
And, the $1.1 billion Baltimore Fire & Police Retirement System terminated the firm as manager of a $60 million index fund, said Abraham Schwartz, general counsel. The assets will go to an existing bond manager that hasn't yet been chosen.
DB decline continues
The number of defined benefit pension plans continues to shrink, and the number of defined contribution plans continues to grow, according to new estimates from EBRI.
The research organization estimated there were 53,000 defined benefit plans this year, down from 84,000 the preceding year, while defined contribution retirement plans grew to 647,000 from 619,000 the previous year.
Most defined benefit shrinkage is among small plans.
The number of participants covered by defined benefit pension plans held steady around 40 million this year. Participation in defined contribution plans increased to 46 million from 44 million the previous year.
Revenue up, profits down
Revenues at investment management firms jumped to a median 20%in 1996, up from the median 12%growth posted in 1995, according to Investment Counseling's seventh annual industry survey.
Profit margins for the year slipped to a median of 29% down from 31%the previous year, as money managers increased expenditures.
Among other key findings, more than 90%plan to increase systems and technology spending in the next three years and more than 75%are offering long-term incentive compensation.
American Air taps 2
American Airlines hired Bridgewater Associates and BNY Currency Overlay as currency overlay managers for its $5 billion defined benefit plan and its $3 billion defined contribution plan for pilots. Each handles the currency component of $100 million of foreign equities.
Existing currency overlay managers J.P. Morgan and Goldman, Sachs "will probably" get an increase in the amount of foreign equities for which they provide currency overlay, said William Quinn, president of AMR Investment Services, which oversees the pension fund.
Emerging managers sought
The $18 billion Ohio Bureau of Workers Compensation will issue RFPs for emerging managers in all asset classes, including alternatives, by the end of this month, said Bob Cowman, CIO. Callan Associates is assisting.
The fund is expected to allocate up to $500 million to 10 smaller firms. Hirings are expected in the first quarter of 1998.
Cincinnati Milacron hires
The $20 million Cincinnati Milacron pension fund hired Putnam as its first international core equity manager.
The $15 million portfolio will come from a reallocation from domestic equity, said John Francy, director of treasury operations
Disciplined Investment Services assisted.
Mitsubishi taps NatWest
The 150 billion yen ($1.24 billion) Mitsubishi Corp. Pension Fund hired NatWest Gartmore Investment Management Japan to manage a pan-European equities account of 19 million yen ($30.8 million). Four other managers were hired for non-Japanese equities, but their identities couldn't be learned.
County fund drops JMC
The $800 million Arlington County (Va.) Employees' Retirement System terminated JMC Capital Management, a U.S. small-cap growth stock manager that ran $80 million, and replaced it with Trinity Investment, a core small-cap manager.
JMC was terminated for a combination of performance and style reasons, said Bruce O. Kallos, administrator.
Paul C. Mitchell Jr., JMC's director of marketing, declined to comment.
The Blackstone Group closed Blackstone Capital Partners III, raising $4 billion. It is the second largest private equity fund ever raised; KKR raised $5.8 billion last year.
Investors in BCP III include $30 million from San Francisco City & County Retirement System; $200 million from New York Common Retirement Fund; $10 million from Memorial Sloan Kettering Cancer Center; $20 million from Rhode Island Investment Commission; and $75 million from Pennsylvania State Employes' Retirement System.
Trust company launched
Furman Selz Holdings has launched a trust company subsidiary that will provide securities lending and cash management services to institutional investors. Brinson Partners will provide asset management services for the securities lending clients.
Puget Sound may search
Puget Sound Energy is analyzing its $250 million 410(k) plan following the acquisition of Washington Natural Gas, said Ted Gates, compensation manager.
Puget Sound Energy uses a bundled approach through T. Rowe Price; Washington Natural Gas, an unbundled approach with Howard Johnson as dministrator.
Plan changes should be finalized sometime in late 1998. R.V. Kuhns is the consultant.
Bond finalists named
The $176 million Meriden (Conn.) Municipal Employee Pension Board plans to interview finalists Seix Investment Advisors and Caywood-Scholl Capital in a search for a U.S. bond manager, said John Miniter, chairman.
A decision is expected Nov. 12.
A.G. Edwards Asset Performance Monitor is assisting.
Last month, the board terminated Princeton Investment and Anchor Capital, its two bond managers, as well as equity managers City Capital Counseling, Fred Alger and Savoy Asset Management.
Scotts hires Fidelity
The Scotts Co. hired Fidelity as bundled provider for its $85 million savings plan. Scotts will offer 11 Fidelity funds, a company stock fund and the Baron Asset Fund.
A company spokesman declined to discuss the plan's previous service providers.
City fund eyes small caps
The $47 million Boston Water and Sewer Commission pension fund is considering changing its investment policies and objectives to allow investments in U.S. small-cap stocks, said Luciano Petruzziello, deputy director of finance.
The fund has 60%of its assets in stocks (including 10%in international) and the 40%in bonds. A change would allow the fund more flexibility, he said.
Hannah Group is assisting.
Optional plan hires 2
State Universities Retirement System of Illinois hired TIAA-CREF and Aetna as investment managers for its new optional retirement program.
Trustees also considered VALIC, but thought VALIC's fee structure was too high, said James M. Hacking, executive director of the $8.2 billion system. VALIC will be allowed to come back to the board with a revised fee structure.
The new program should begin by April 1.
Decisions on how many and which investment options is expected at the end of November.
ICMA was hired last month to provide record keeping and investment management.
DePuy picks Scudder
DePuy Inc. hired Scudder as bundled provider for its $40 million 401(k) plan.
Eight Scudder funds and two from Janus will be offered.
Littlejohn fund closes
Littlejohn & Co.'s Direct Investment Fund closed with $205 million in commitments.
The fund takes control equity positions in companies in the $100 million to $300 million revenue range that can benefit from an operational or financial restructuring or are part of a consolidating or restructuring industry, said Angus Littlejohn Jr., chairman.
Fund taps manager
The $105 million Adams County (Colo.) Retirement Plan hired Denver Investment Advisors as a small-cap value equity manager.
Plan officials will place installments with the manager over time as cash becomes available, said Joann Mendenhall, administrator. Mercer assisted.
Bundled provider set
TXI Inc., recently formed after the merger of Chaparral Steel and Texas Industries, hired Putnam as bundled provider for its new $75 million 401(k) plan.
The new plan has eight options, six from Putnam, one from Janus and one from First Chicago NBD.
Previously, both plans were unbundled, and Texas Industries' plan was directed by trustees. Chaparral's $30 million plan was administered by Mercer and had three investment choices. Texas Industries' $45 million plan had five managers and used two mutual funds.
Allbright & Hart Financial Advisors assisted.
Chancellor hires exec
Ray Maxwell joined Chancellor LGT as a managing director in the alternative asset management group, a new position.
Mr. Maxwell will be responsible for identifying European private equity partnerships. He most recently was a director with Granville Private Equity Funds.
Endowment hires officer
Lori Mills joined the University of Wisconsin System as assistant trust officer, who will oversee its $250 million endowment fund.
She replaces David M. Konshak, who moved to a position in business finance at the university. Ms. Mills was a vice president in securities lending at Boatmen's in St. Louis, which was acquired by NationsBank.
SAVER passage predicted
David Frank, a Republican staff aide to the House Education and the Workforce Committee, is predicting passage of the SAVER bill before lawmakers head home next month. The bill, H.R. 1377, or the "Savings are Vital to Everyone's Retirement Act" and introduced Rep Harris W. Fawell, R-Ill., cleared the House on May 21, but stalled in the Senate. The bill would require bipartisan national retirement savings summits to be held in conjunction with the White House, and initiate a broad-based program to educate people on the need to save for their old age.