Brinson Partners Inc., Chicago, might be the best all-around active U.S. domestic equity manager in the world.
At least that's what a money manager evaluation by the $128 billion California Public Employees' Retirement System shows.
Brinson Partners is one of 15 manager finalists in Sacramento-based CalPERS' hunt for the best domestic equity managers.
Brinson scored the highest in the evaluation -- 323 points out of a possible 400 points.
The manager hunt was launched early last year and 270 manager proposals were made.
Typically, pension fund executives and trustees choose money managers on the basis of investment style or approach. CalPERS, however, is looking for the best domestic equity managers regardless of style or approach.
CalPERS will use what it calls completion funds to eliminate gaps in investment styles after it chooses several of the finalists for domestic equity assignments.
Some $8 billion in domestic equity manager assignments is at stake.
CalPERS has scheduled final interviews for the middle of this month. Managers could be hired in May.
A key reason for Brinson's top finish is its score on in-person interviews. The 15 managers were interviewed at their offices by a CalPERS staff team. Brinson scored 181 out of a possible 200 points for the on-site interview.
In the technical score, Brinson got 82 points out of a possible 100.
The technical portion was strictly quantitative and involved such things as managers' selectiveness in picking underpriced securities.
Brinson got a score of 60 out of 100 based on the fees it was asking. CalPERS staff members use a mathematical formula to score fees. Lower fees get higher scores.
Poor fee scores pushed some investment managers down in the rankings. Trinity Investment Management Corp., Bellefonte Pa., which scored five points on fees, was at the bottom of the finalist rankings.
The second highest total score, 300 points, went to State Street Global Advisors, Boston, for what was termed a matrix investment style, a computer-driven approach which identifies mispriced securities.
Its on-site score was 151, 30 points below Brinson's. Its technical score, 65, was also lower. On fees, however, State Street Global scored 84 points, 24 higher than Brinson.
The on-site, technical and fee scores for other finalist managers were:
* Geewax, Terker & Co.: 167, 71, 53.
* Denver Investment Advisors LLC: 148, 73, 60.
* Oppenheimer Capital: 153, 61, 64.
* Putnam Investments: 172, 61, 40.
* U.S. Trust of New York/
Campbell, Cowperthwaite: 158, 55, 60.
* The Boston Co. (core portfolio): 122, 61, 80.
* Brown Capital Management Inc.: 148, 63, 50.
* Cohen Klingenstein & Marks Inc.: 120, 53, 87.
* RCM Capital Management LLC: 162, 68, 27.
* Goldman Sachs & Co. Asset Management Division (total market): 162, 60, 33.
* Goldman Sachs (market): 157, 60, 33.
* Goldman Sachs (growth): 157, 60, 33.
* Oak Associates Ltd.: 140, 60, 42.
* New Amsterdam Partners LLC: 131, 61, 47.
* The Boston Co. (dynamic): 131, 59, 47.
* Trinity Investment Management (valueplex): 157, 62, 5.
Although only 15 managers were selected, some, such as Goldman Sachs and Boston Co., made the finalist list more than once for different investment styles.
Several firms -- including Rosenberg Institutional Equity Management, Ark Asset Management Co. Inc. and RB Haave Associates Inc. -- just missed being in the finals.
Rosenberg Institutional had a better technical score (145) and on-site score (66) than some of the finalists, but it scored zero on fees.
Ark and RB Haave Associates also got zero on fees.
Those that weren't named as finalists but had good scores might be interviewed at a later date by CalPERS.
The fund wants to set up a pool of potential managers that could be hired to replace domestic equity managers that don't perform well or have other problems.
By setting up the pool, CalPERS avoids the problem of doing new manager searches when managers are dropped. Costs vary, but pensions officers say manager searches are expensive in dollars and staff time used.
CalPERS staff members hope that by picking the best equity money managers, they can get active investment returns well in excess of passive returns, even after fees and commission costs are deducted.
