AT&T Investment Management Corp., Berkeley Heights, N.J., outsourced its $3.8 billion private investment portfolio to J.P. Morgan Investment Management along with its entire seven-member private equity investment group. The ATTIMCO private equity team will continue to manage the AT&T assets, but will become J.P. Morgan employees and will form the nucleus of its private investment management group.
ATTIMCO is responsible for AT&T's $54 billion in pension assets. A J.P. Morgan spokeswoman said the arrangement will allow the firm to expand its private equity investment program with an experienced group of investment professionals. JPM now has only about $250 million in private equity investments under management.
New York City Police Pension Fund reallocated $400 million to existing mortgage portfolio manager Lincoln Capital following the termination of Bear Stearns.
Trustees of the $13.8 billion fund decided to drop the mortgage manager because of portfolio manager changes, said Jon Lukomnik, deputy comptroller. He added the firm continues to run other types of portfolios for city funds.
California Public Employees' Retirement System, Sacramento, revamped its corporate governance program to identify corporate managers adding little economic value. The $124 billion system will be using data from consultant Stern Stewart & Co., developers of the economic value added technique.
Executives who are adding little economic value, but manage to keep their stock price higher than some troubled competitors, could wind up on CalPERS' 1997-'98 focus list of underperforming companies.
Options based on mutual fund returns will begin trading Dec. 3 on the Chicago Board Options Exchange.
The CBOE, Lipper Analytical Services and Salomon Brothers collaborated on the effort to introduce the options, which will be based on two new indexes: the Lipper/Salomon Growth Mutual Fund Index and the Lipper/Salomon Growth and Income Mutual Fund Index. Each index will be made up of the 30 largest funds within the respective investment objective. The indexes will be equal weighted, with rebalancing occurring quarterly with option expiration.
PIMCO Advisors L.P. reported assets under management rose to $130.6 billion as of Sept. 30, compared with $104.5 billion a year earlier. Revenue for the third quarter also was up 28.9% to $125.1 million, an increase from $97.1 million in the third quarter 1996. Net income increased 35.1% to $32 billion from $23.7 billion last year.
REITs are driving up property prices, but also are promoting market discipline, said Peter Korpacz, publisher of the Korpacz Real Estate Investor Survey. REITs are on a tear to buy property to bulk up their market capitalization to $1 billion, said Mr. Korpacz.
A REIT that hits the $1 billion target gets noticed by more analysts, which attracts more large institutional investors and credit rating agencies, which could lead to a lower cost of capital. But if a REIT does a deal the analysts don't like, the stock price will take a hit, he said.
