MONTPELIER, Vt. -- The Vermont Teachers' Retirement System, with approximately $900 million in assets, will review a draft of a new investment policy by Callan Associates at its June 4 board meeting.
The investment policy "may not change substantively," said James H. Douglas, state treasurer.
At the end of 1997, the system had 33% in global equity, 26% in domestic equity, 7% in international equity, 11% in domestic fixed income, 15% in global fixed income, 7% in real estate and 1% in alternative investments and cash.
The system uses Fidelity as a large-cap domestic equity manager and J&W Seligman as a domestic small-cap manager. Delaware Investment Advisers runs global equity and fixed-income portfolios. Scudder, Stevens & Clark manages international equity, and Loomis Sayles is a domestic fixed-income manager.
Texaco drops WR Lazard from its minority roster
WHITE PLAINS, N.Y. -- Texaco Inc. terminated WR Lazard, which had managed $30 million in a domestic fixed-income strategy for Texaco's $1.7 billion pension plan since 1988.
Texaco spokeswoman Faye Cox said the money from the pension fund's first minority manager has been reallocated to other firms already managing assets for Texaco, but would not specify how.
Women- and minority-owned money mangers continue to run 13% of the pension fund, she said. One of them, Frankie Hughes, principal at Hughes Capital Management, said the firm recently was awarded an additional $10 million by Texaco, and now is managing around $26 million for the oil giant in an active bond strategy benchmarked to the Lehman Aggregate Bond index.
WR Lazard officials did not return phone calls by press time.
ERISA Advisory Council to study asset 'leaks'
WASHINGTON -- The Labor Department's ERISA Advisory Council has agreed to this year study "leakage" from the nation's pension systems.
Leakage includes cases in which participants borrow money from their retirement plans and fail to repay it, or in which they quit their jobs and fail to roll retirement savings over into new employers' plans.
The council, made up of outside industry experts, also will study why small businesses are not adopting retirement plans.
Council members will hold hearings on both subjects during the year and present their reports in November.
GM retirees appeal federal court decision
WASHINGTON -- Attorneys for 84,000 General Motors Corp. retirees asked the U.S. Supreme Court to rule on their claims for lifetime health care benefits.
A federal appeals court ruled in January that GM had the right to amend its health plan for all retirees. That decision reversed an earlier determination that GM had agreed to provide lifetime health benefits for up to 50,000 salaried early retirees.
The retirees asked the Supreme Court to take up the case because of what attorneys are calling conflicts among appellate court rules for granting lifetime health benefits.
PBGC, Stackpole reach agreement
WASHINGTON -- The PBGC reached an agreement under which Stackpole Corp. will contribute $12 million to an underfunded pension plan. The additional contribution improves the plan's funding to about 85%.
The PBGC also will hold $25 million worth of interest in the company's Canadian affiliate. Moreover, the Newton, Mass.-based company will pay a penalty of $142,000 for failing to notify the PBGC on time of cutbacks in its work force.
The company's pension plan covers about 25 workers. During the past decade, the company has sold or shut down most of its facilities and laid off 3,700 workers.
Social Security tab could hit public sector organizations
WASHINGTON -- Public sector organizations could be hit with a $600 million tab in the first year if they are required to provide their employees with Social Security benefits, a new survey by the Public Retirement Institute says.
That is about how much pension plans would lose in contributions diverted to Social Security, said Jennifer Harris, executive director. An estimate prepared by the Congressional Budget Office projected the amount would be $300 million.
Among the hardest hit would be the large public employee and teacher retirement systems, as well as some police and fire plans, according to PRI, which based its estimate on a survey of more than 500 public pension plans.
Extending Social Security coverage to public sector employees not now covered is one of the many proposals being debated in Washington as a way of propping up the financially ailing system.
Maryland county fund wants investment cap lifted
ROCKVILLE, Md. -- Montgomery County Employees' Retirement System will seek legislation to lift its 10% cap on investments in non-U.S. stocks. The system will decide at its June 5 board meeting "what might be appropriate" and seek the legislation by the fall, said Julie Dellinger, executive director.
The $1.7 billion system will also decide in June whether to "equitize" its $22 million long-short portfolio with Numeric Investors and will examine its real estate portfolio. The system also will review whether it should continue to have a mix of open- and closed-end real estate funds, as well as private and public investments.
Taunton, Mass., retirement narrows consultant search
TAUNTON, Mass. -- Taunton Contributory Retirement System picked Dahab Associates, New England Pension Consultants, H.C. Wainwright, and the incumbent Segal as finalists in its search for an investment consultant, said Paul J. Slivinski, executive secretary.
The system, with $85 million in assets, is conducting a routine search because Segal's three-year contract expired in June 1997. The firm continues to be on a retainer.
Chicago parks plan seeks prudent person rule
CHICAGO -- Chicago Park Employees' Annuity and Benefit Fund moved a step closer to adopting a prudent person rule, as a state pension commission approved a bill to be considered by the state house.
If the bill passes, the fund will conduct an asset allocation study and review its investment managers, said Joseph Fratto, executive director of the $606 million fund. Ennis Knupp would assist with the study.
New Morningstar group to give customized fund details
CHICAGO -- Morningstar Inc. formed the Morningstar Institutional Services Group to serve the institutional and corporate marketplace. The new group will provide customized mutual fund analysis, reporting and communications. Also offered will be fund company board reports for 15(c) compliance, investment monitoring for style and expenses, custom research and editorial, reprints of Morningstar articles from the firm's individual and professional market products, custom benchmarking and peer grouping, and a variety of services for the 401(k) market.
Gary Silverman was named vice president of institutional services and heads the group; he was director of marketing at Morningstar.
Oklahoma City police to pick U.S. growth equity manager
OKLAHOMA CITY -- The Oklahoma City Police Pension & Retirement System will interview two finalists for a $100 million domestic growth equity portfolio placement. Robert Wallace, executive director of the $975 million system, said representatives of Putnam and Montag & Caldwell will appear at the board's May meeting; selection is expected immediately.
Funding will be from an internal reallocation of assets, he said.
SEIU withdraws choices for Columbia/HCA board
WASHINGTON -- The Service Employees International Union Master Trust, Washington, has withdrawn its nominations of Steven Wallman, a former Securities and Exchange Commissioner, and Howard Newman, a former administrator of the federal Health Care Financing Administration, as independent candidates to the board of directors at Columbia/HCA Healthcare Corp.
Andrew L. Stern, chairman of the SEIU Master Trust, said the nominations were withdrawn after the health care company agreed to name three new outside directors who will attend a special meeting with members of the Council of Institutional Investors to discuss ongoing corporate governance concerns.
Worcester retirement fund goes for bond issue
WORCESTER, Mass. -- The Worcester City Council unanimously voted to issue pension obligation bonds for the Worcester Retirement System. It could issue more than $200 million in bonds, almost doubling the system's assets to $500 million total.
The Massachusetts state Legislature has to approve the bond issue, which could occur later this spring. The system likely will add money managers if it issues the bonds.
Consolidated Papers considers investment changes
WISCONSIN RAPIDS, Wis. -- Consolidated Papers Inc. may move some money to active management from indexing and add a manager for its $600 million defined benefit plan, said John D. Steinberg, treasurer.
It could make a decision in a couple of months. It is considering alternative equities, including hedge funds.
The fund has 20% in an S&P 500 index fund, managed by State Street Global Advisors. The pension committee hasn't decided how much to move from that fund to active management.
A State Street consulting group is assisting in the decision-making process.
Belgian fund decides to vote at shareholders' meetings
BRUSSELS, Belgium -- The Belgian Pension Fund for Doctors, Dentists and Pharmacists has become the first in Belgium to decide to vote at the shareholders' meetings of selected companies in Belgium, announced Deminor, a minority shareholder consultancy in Brussels.
This is the first year institutional investors will vote at shareholder meetings in the country. According to Deminor, it had not been obvious before that shareholders there could legally vote. But a combination of a new interpretation of the law, along with pressure from corporate governance groups, has made it possible, Deminor said.
In a press release, Karel Stroobants, deputy manager of the 15 billion Belgian francs (U.S.$394 million) fund, said the professional management of an equity stake requires that the voting rights attached to it be actively exercised. This philosophy is in line with the fund's long-term investment policy and with its intention to fully exercise its fiduciary duty toward its members, he said.
Securities firm establishing brokerage business
NEW YORK -- D.E. Shaw Securities LP moved ahead with efforts to create a single-stock institutional brokerage business, hiring four people to work on the effort.
Bob Rice, formerly with Furman Selz LLC, will be Shaw's head of soft-dollar services; and Tom Shapero, Adrienne Toscano and Rob Antolini will work as traders and in sales.
Mr. Shapero and Ms. Toscano were with Sherwood Securities Corp. and Mr. Antolini was with Schroder & Co. Inc.
Pension plan designer adds to its stable of specialists
DAYTON, Ohio -- C.H. Dean & Associates acquired von Schoeler, McBride & Associates Inc., a pension fund administrator. Terms were not disclosed.
Dean has pension fund administration abilities, but the acquisition will allow it to handle greater volume.
Dean specializes in creating custom pension plans for small companies, such as physicians' groups. Investment management is handled by a subsidiary, Dean Investment Associates.
KCSI is buying money manager
KANSAS CITY, Mo. -- Kansas City Southern Industries is acquiring 80% of Nelson Money Managers in the United Kingdom. Terms were not disclosed. Nelson offers asset management services to private clients in retirement, and has about $1 billion under management.
KCSI executives said Nelson has distribution capabilities that complement KCSI's other financial services, namely Janus and Berger mutual funds. Merrill Lynch International advised Nelson on the transaction.
Study: CEOs see worldwide need for retirement reform
ATLANTA -- Nearly three-quarters (72%) of chief executives around the world, including 75% of those in the United States, say policy-makers should fundamentally restructure current national retirement programs, according to a survey by Watson Wyatt Worldwide. Of the CEOs surveyed, 80% say they face an aging population that will strain the national retirement system.
Also, 88% of executives surveyed favor replacing all or part of the national retirement system with a form of private savings accounts. Fully 100% of executives surveyed in Italy, Japan and Mexico favor replacing all or part of the national retirement system with some form of private savings accounts. In the United States, the figure was 87%.
Watson Wyatt's survey contains responses from 773 CEOs in 23 countries.
AmEx Retirement to provide more performance details
MINNEAPOLIS -- American Express Retirement Services is beta-testing individual performance statements for 401(k) participants, said Katie Libbe, vice president-marketing.
The statements will show participants how their investments performed, not just the general performance of the particular funds in which they invest.
The company hopes to roll out this enhanced 401(k) statement analysis next year. When it does, it will be available at no additional cost to any participant whose 401(k) sponsoring company wants to provide it, Ms. Libbe said.
Pension plans may consolidate as companies merge
HOUGHTON, Mich. -- Upper Peninsula Energy Corp., Houghton, Mich., could consolidate its $65 million in pension assets with those of Wisconsin Public Service Corp., Green Bay, because of a pending merger of the companies.
Upper Peninsula has $50 million in defined benefit assets, run by American Express Retirement Services, EBS Asset Management, Employers Insurance, and First of America. It also has $15 million in 401(k) assets, managed by First of America.
Burton C. Arola, UP vice president-finance, secretary and treasurer, and R.G. Baeten, WPS treasurer, said the companies are discussing possible consolidation of the pension and 401(k) assets. No decision has been made about whether any of the UP managers will be retained. A decision likely won't be made until after the merger is approved.
WPS has $400 million in defined benefit assets and $150 million in 401(k) assets.
The companies have no money managers in common. Mercer is assisting in the study. The merger requires federal approval, which could take several months.
Health system pension plan considers adding two funds
ORANGE, Calif. -- St. Joseph Health System may be adding an S&P 500 Index Fund and a socially responsible investment fund to its defined contribution plan, said Dave Schinderle, treasurer.
Officials are considering Vanguard for the index option and the Domini 400 Fund managed by Mellon Equity. The fund has more than $100 million in assets and five options. A decision is expected later this year.
Dravo Corp. may redesign its 401(k) plan
PITTSBURGH -- Dravo Corp. hopes to restructure its $10 million 401(k) plan, said David L. Schneider, director-risk management and pension investments.
The plan uses PNC Bank and CIGNA as investment managers. The bank is also the trustee and record keeper.
The company expects to move the plan, which is for hourly employees, to Vanguard, hiring it to provide all services from investing to record keeping, Mr. Schneider said. Dravo has a $25 million salaried plan now with Vanguard.
He said the company hopes to make a decision by the end of the year.
Real-time index to track U.S., global depository receipts
NEW YORK -- Bank of New York will begin offering a real-time market value-weighted index to track the performance of all American and global depository receipts trading on U.S. stock exchanges. The new Bank of New York ADR index consists of 431 companies from 36 countries, with a total market capitalization of more than $3.1 trillion.
The index contains a composite index and four regional indexes: the Europe ADR index, Asia ADR index, Latin America ADR index and Emerging Market ADR index.
MAR, MLM indexes' returns up for March
NEW YORK -- Managed futures firms performed well in March, returning about 1.5% according to industry gauges. The MAR Trading Advisor index returned 1.5%, on a preliminary basis, while the Mount Lucas Management index returned 1.6%.
The strong U.S. dollar allowed for gains in currency trading, Lois Peltz, MAR's managing editor, said in a statement.
MSCI EAFE index posts first-quarter gains
NEW YORK -- The Morgan Stanley Capital International EAFE index posted a 13.7% gain in dollar terms in the first quarter, while the World index rose 14%. The best-performing regional index of developed markets was the MSCI Europe index, which climbed 19.8% The MSCI Emerging Markets Free index advanced only 5.7%; however, the EMF Far East index was up 20%.
The best and worst performers were both emerging markets. Korea's market shot up 58.3%, while Colombia's fell 22.9%.
In March, the MSCI EAFE index was up 3%, while the World index advanced 4.1%, and the Emerging Markets Free index posted a 4% rise.
Hedge fund managers'returns up in March
NEW YORK -- Hedge fund managers reported positive returns for March, with Europe-focused managers and macro-style managers performing best. The Hennessee Hedge Fund Index returned 3.2% in March, and was up 5.7% in the first quarter. Europe-focused firms in the Hennessee index returned on average 9.2% in March, followed by macro managers with a return of 7.3%.
Preliminary data at MAR/Hedge also showed macro managers performing well, with a monthly return of 6.5%.
Short sellers had another tough month with the U.S. stock market performing well. Short sellers tracked by Hennessee were down 0.6%, the worst performing category, while those at MAR/Hedge were down 0.2%.
MetLife now owns all of its Korean subsidiary
NEW YORK -- Metropolitan Life became the sole owner of Kolon-Met Life Insurance, its Korean subsidiary, acquiring the remaining 49% partnership stake from Kolon Group of Seoul for $15.6 million. The transaction has won regulatory approval in Korea, MetLife said.
Kolon-Met Life, which will be renamed MetLife SaengMyoung, sells individual life insurance, retirement savings and health insurance products as well as group life insurance and retirement savings products in the Korean market. Kolon-Met Life had total assets of $290 million, revenues of $189 million and paid-in capital of $18.9 million as of year-end 1997.
City retirement system ends asset allocation study
BROCKTON, Mass. -- The Brockton Contributory Retirement System, is expected to release results of an asset allocation study at its April 29 board meeting. The study was done by H.C. Wainwright & Co., the $140 million fund's consultant, said William R. Farmer, a trustee.
The system may add one or two managers in new asset classes, but does not envision any manager terminations, he said.
About 32% of the system's assets are in domestic equities; 30%, domestic fixed income; 10%, real estate; 3%, venture capital; and 25%, international equities and bonds.
