ABB may form firm
ABB pension executives might form a money management operation to offer its market-neutral manager process to other pension funds, said Larry Morgenthal, manager of pension and thrift management.
While the effort has not been finalized, the plan is to offer an equitized market-neutral fund-of-funds using the managers in ABB's U.S. equity allocation, Mr. Morgenthal said.
Eric Wood, director of pension and thrift management, also would work on the operation.
"We've been doing it 61/2 years with good numbers," Mr. Morgenthal said. Investment managers selected by ABB, which has about $2.4 billion in retirement assets, go long and short U.S. stocks, seeking to capture pure alpha. The managers then equitize their positions with S&P 500 Index futures, he said.
Power company revamps
The $200 million defined benefit plan of Sierra Pacific Power hired four stock managers and one bond manager, said Mark Ruelle, CFO.
Equity managers hired were: Putnam, $33 million in large-cap growth; Capital Guardian, $16 million in core international; Cadence Capital, $14 million in midcap growth; and Boston Co. for $14 million in midcap value.
Chancellor LGT, which had run $55 million in large-cap growth stocks, was terminated, and the large-cap value portfolio of Boston Co. will be reduced to $33 million from $55 million to fund the new equity managers.
Sirach Capital will run $18 million in intermediate-term bonds, funded by reducing the allocation to long-term bond manager Loomis, Sayles to $31.5 million. Callan assisted.
NYC Police switch
The $13.8 billion New York City Police Pension Fund reallocated $400 million to Lincoln Capital following the termination of Bear Stearns as a mortgage manager.
Jon Lukomnik, deputy controller, said the firm was dropped because of personnel turnover. Bear Stearns still runs other money for the city.
PBGC alters procedure
Employers targeted for audits of their PBGC premium payments generally will have to produce only three years of premium-related information, according to Business Insurance, a sister publication of Pensions & Investments.
The agency had been requiring six years of such records as W-2 income statements and pension financial reports. The PBGC only would go back further if problems appear in the first three years of information.
The change is effective immediately.
Transit fund hires
The $1.6 billion Massachusetts Bay Transportation Authority hired McKinley Capital to manage a $10 million hedge fund, said John Gallahue, executive director.
Also, MBTA is following alternatives consultant William Managle, formerly with Hannah, to his new job at the Wellesley Group. Mr. Managle begins at Wellesley Nov. 3.
New option at Shell
Shell Oil soon will allow participants in its two defined contribution plans to use employee contributions to buy stock in parent Royal Dutch Petroleum.
Until the change, only the company's contribution from the 401(m) plan - and not the 401(k) - could be used.
The plans have combined assets of $9 billion.
Funds outperform index
The median equity fund in PIPER's commingled universe handily beat the S&P 500 (10.3% vs. 7.5% in the third quarter, according to PIPER's Flash Report for Commingled Funds.
Small-cap funds fared the best - returning 16.8% for the period.
For the year ended Sept. 30, small-cap value median commingled fund trounced the S&P 500, 45.5% vs. 40.5%. The median small-cap growth fund returned only 26% for the year.
In other PIPER commingled equity categories, only the median core large-cap equity fund bested the S&P, with 40.9%. The same median fund returned just 8.4% for the quarter, underperforming all other categories.
In PIPER's commingled bond universe, the median broad market commingled fund returned 3.4% for the quarter and 9.9% for the year, compared with 3.3% and 9.7% respectively for the Salomon Broad Bond Index
The median limited duration bond fund fared the worst for the two periods, with 2.1% and 6.4% respectively.
Quarter good to managers
Meanwhile, INDATA reports a large majority of active institutional equity managers outperformed the S&P 500 stock index in the third quarter, but most were still behind for the nine months ended Sept. 30.
According to INDATA market research, 78% of active equity managers bested the S&P in the third quarter, while only 41% outperformed the S&P for the nine months.
FRIMCO hires Mastholm
Frank Russell Investment Management hired Mastholm Asset Management as an additional manager for its $850 million International Securities growth fund. Mastholm is a bottom-up, all-cap growth manager.
Stock managers picked
The $20 billion Pennsylvania State Employes' Retirement System hired Alliance Capital and Montag & Caldwell to split $500 million in large-cap growth equity.
They replace Miller, Anderson & Sherrerd.
Trustees also allocated up to $25 million to Keystone Ventures V, a venture capital fund. Cambridge Associates assisted. The allocation will be funded from cash.
All allocations are subject to successful completion of contract negotiations.
Exec joins InterSec
William Libby left the Florida State Board of Administration, where he was portfolio manager for its $5.8 billion international equity portfolio. He joined InterSec Research, where he will be vice president-performance measurement.
At InterSec, he replaces Andrew Kramer, who left the firm.
The Florida board hasn't replaced Mr. Libby yet.
Capital International hired
The $922 million San Antonio (Texas) Fire & Police Pension Fund hired Capital International for $25 million in emerging markets stocks through its emerging markets growth fund.