TORONTO -- The Workplace Safety & Insurance Board of Ontario is searching for at least two managers as the final step in overhauling its C$11 billion (U.S.$7.7 billion) fund.
The fund is looking to hire an active Canadian equity manager and an active international manager that would invest in countries in the Morgan Stanley Capital International Europe Australasia Far East index. Harold Gibbs, vice president of investments, said it's possible another international manager also will be hired, with some leeway to invest in non-EAFE countries, including emerging markets. The new managers are likely to evenly split a total of C$1.5 billion. (U.S.$1 billion).
Last year, the fund indexed half of its total assets, shifting C$6 billion to two external passive managers from internal management. The internal portfolio had been actively managed in U.S. large- and small-cap stocks, Canadian large- and small-cap stocks, and Canadian bonds.
"I can't recall a transition anywhere near that magnitude," Mr. Gibbs said. The change resulted in the firing of two dozen fund staffers in May 1997. One internal staffer, Wayne Simmons, remains. He manages the bond portfolio.
Mr. Gibbs at that time was working with the fund as a consultant with Towers Perrin, which was working for the board on a project basis. He joined the board in November, at which time he initiated a search for a consultant to assist with manager searches. The workers' board tapped Frank Russell Canada, Toronto.
The two passive managers, handling Canadian stocks, Canadian bonds and U.S. stocks, are TD Quantitative Capital, Toronto, for domestic stocks and bonds, and Barclays Global Advisors, Toronto, for U.S. stocks.
Funding for the new hires will come from them and from the fund's five active external managers. Mr. Gibbs wouldn't identify the active managers, or which portfolios were likely to be taken from each.
In addition to the C$6 billion managed by TD and Barclays, two active Canadian equity managers and two active global equity managers manage a total of C$4 billion; and one balanced manager has about C$300 million. About C$400 million is managed internally in Canadian bonds and the rest of the fund is invested in real estate.
Mr. Gibbs would not give specifics on the various mandates.
After the new hires are complete, the fund will be close to its "normal" mix of 60% equities, 37% fixed income and 3% real estate, he said.
The board is targeting June 1 to complete the manager hirings. The short list for the Canadian equity manager search is expected by late March, with the short list in the other searches to be compiled sometime after that. Linda Grendon of Frank Russell Canada will be screening firms for the fund. No RFPs will be sent out.
Explaining the new moves, Mr. Biggs said board officials wanted to add active mandates to enhance the overall equity portfolio.
"It's a tough bloody bogey," Mr. Gibbs said of U.S. stocks. "TSE has been a tough bogey, too . . . While it makes sense to index a portion of Canadian equities, we want to build up around the core passive portfolio."
Only active managers manage money in non-North American equity markets for the fund. Mr. Gibbs said an index doesn't represent the broad opportunities in that marketplace.
At this time, the $4 billion internally managed bond portfolio is expected to remain untouched. No more manager searches are expected.