Ontario Teachers' Pension Plan Board, Toronto, and Stichting Pensioenfonds ABP, Heerlen, The Netherlands, engaged in what is believed to be the first-ever direct equity swaps between two pension funds.
The funds engineered two swaps of the Toronto 300 index and the Dutch AEX index with a total value of $60 million. The Ontario fund receives the total return of the AEX index; ABP receives the Canadian stock index return.
By not using an intermediary, the funds avoided brokerage commissions, market impact costs or swap spreads. The swaps also helped the teachers' fund raise its international exposure without violating the 20% cap on foreign investment imposed by Canadian law.
ABP has 272 billion guilders ($133 billion) in total assets. The Ontario fund's total assets are C$55 billion (U.S.$39 billion).
Amesbury (Mass.) Town Retirement System is reviewing its asset allocation over the next couple of months with help from Advest Custom Consulting, said Sheryl Trezise, retirement administrator. The $19.5 million fund's target mix is: 30% to 43% U.S. stocks; 25% to 40% U.S. bonds; 5% to 15% non-U.S. stocks; 5% to 10% REITS; 0% to 5% alternative investments; and 0% to 5% cash.
The fund hired Fiduciary Trust International as its first small-cap equity manager. The firm will manage 5% of the fund's total portfolio. The funding source has yet to be determined.
IMC Global Inc., Northbrook, Ill., added a profit-sharing plan for its salaried employees. About 60% of participants in the company's $114.5 million defined benefit plan have opted to join the new plan, said Claudia Davidson, manager of pension benefits.
No money will be transferred from the defined benefit plan to the new plan, but each employee who opts for the new plan will receive the company's profit-sharing contribution at the end of 1998, she said.
The record keeper and administrator will be Marshall & Ilsley, the same firm IMC uses for its 401(k) plan. The options also will be the same: Marshall & Ilsley Stable Principle Fund, Bond Fund of America, Vanguard Wellington Fund, Fidelity Equity Income Fund, Vanguard Index Trust 500 Fund, Fidelity Magellan, Templeton Foreign Fund, Franklin Balanced Sheet Investment Fund and IMC Global stock.
Capital Resources, the former consulting arm of SEI Corp., finalized a joint venture agreement with Hedge Fund Research of Chicago to create Capital Hedge Fund Advisors, said William Nicholson, CEO of Capital Resources. The deal will allow Capital Resources to offer alternative investment advice.
Capital Resources also is expected to acquire another consulting firm in the next two weeks.
College and university endowments had an average rate of return of 20.4% in 1997, an increase from 1996's return of 17.2%, according to the National Association of College and University Business Officers. Return rates ranged from 6.8% to 46.9%.
SEARCHES & HIRINGS
California Public Employees' Retirement System, Sacramento, narrowed to 15 finalists its search for managers to handle U.S. equity assignments totalling $8 billion.
Finalists are: Brinson Partners; State Street Global; Geewax, Terker; Denver Investment Advisors; Oppenheimer Capital; Putnam Investments; US Trust of New York-Campbell Cowperthwaite; Boston Co.; Brown Capital; Cohen Klingenstein & Marks; RCM Capital; Goldman Sachs; Oak Associates; New Amsterdam Partners; and Trinity Investment. The firms will be interviewed March 11-13.
The $128 billion system also made several alternative investment commitments: $75 million to Aurora Equity Partners II, a ``buy-and-build'' fund targeting middle- and small-market companies; $125 million to Beacon Group Energy Investment Fund II; and $150 million to CVC European Equity Partners II, which invests in European management buyouts.
University of Puget Sound, Tacoma, Wash., will commit $2 million of its endowment fund to the Kelso Investment Associates Fund VI, a leveraged buyout fund.
Funding will come from the $148 million fund's cash reserves. Frank Russell assisted.
Norman Thompson Outfitters Inc., Hillsboro, Ore., hired T. Rowe Price as bundled provider for its 401(k) plan.
The $9 million plan was unbundled. Amy Reed, benefits specialist, would not name the plan's previous providers. The search was done in-house.
CORRECTION: Norfolk County Retirement System picked Morgan Grenfell to run $10 million in a small-cap growth stock portfolio. The firm's name was inadvertently omitted from the Feb. 12 P&I Daily.