The Illinois Legislature yesterday passed a bill allowing the Chicago Board of Education to skip its annual contribution to the Public School Teachers' Pension & Retirement Fund of Chicago if the funded ratio reaches 90%.
This year the ratio stands at 95%, said Michael Nehf, executive director. ``It jeopardizes the pension fund's strong financial position and it's an unfortunate precedent that was set,'' he said.
The $8.2 billion fund will lose $20 million in school board contributions this year and about $400 million over the next 10 years. The money withheld from the teachers' fund, along with revenue from ``sin taxes,'' will be used to fund schools statewide.
Police and Firemen's Disability & Pension Fund of Ohio's trustees will meet Dec. 16 to consider changes to its $3 billion U.S. equity portfolio as a result of a review by Wilshire Associates. Alan Procter, executive director of the Columbus-based fund, said manager searches might be required to implement any changes. But he declined to speculate further on the results of the review.
The $7.2 billion fund also plans to review its U.S. bond and non-U.S. equity portfolios. Those reviews will then be followed by an emerging market manager search. No timetable has been established.
Board of Public Utilities of Kansas City, Kan., might hire more small-cap to midcap equity managers and allocate more money to existing real estate and international equity managers, following an asset allocation study. The board of the $270 million defined benefit plan will meet Dec. 23 to discuss the results the study done by DeMarche.
If the board approves a manager search, it would likely not be done until the second quarter of 1998. Officials have yet to determine the size or style of the new portfolio. The board also will decide after the first of the year whether to allocate additional assets to real estate managers MetLife and Prudential, which together manage 2% of the assets.
Closed-end equity portfolios tracked by Lipper Analytical were sharply hit by losses in world markets in October, with an average registered loss in net asset value of 11.57% among the 350 funds followed. Closed-end funds investing in emerging markets had an average loss of 14.7% in net asset value, compared with an average 5.6% loss for developed country funds.
The performances of developed-market closed-end funds have stayed barely positive in 1997 through Oct. 31, with average returns of 2.3% in net asset value. Returns of emerging markets portfolios averaged -6.2% on NAV and -7.4% for the year through Oct. 31.
Bond closed-end funds fared better through Oct. 31, with average returns of 4.3% on NAV. But the average return was -7.4% in October.
State Street Mansion House Investment Management Services will form a joint venture with Guangdong Overseas Chinese Trust & Investment to seek a license to distribute mutual funds in China. Under the agreement, SSMH will work with Guangdong Overseas to obtain regulatory approval to distribute mutual funds in Guangdong province.
Robert Fleming Holdings and GUTA BANK are forming a joint venture to offer a domestic mutual fund to Russian investors. The new company would be called Fleming GUTA Investment Co. ZAO. Fleming already manages more than $600 million in Russian securities on behalf of international investors.