Teamsters press case
The $18.2 billion Central States Southeast & Southwest Areas Pension Fund could begin a search soon for a second named fiduciary, pending a court motion. Morgan Stanley now is the sole named fiduciary.
The DOL is supporting a motion in U.S. District Court by the fund's trustees seeking the second named fiduciary, which has the authority to allocate assets and hire and fire managers.
Judge James B. Moran could rule Tuesday. If it's approved, the fund will seek bids by July 1, with plans to hire a firm by Oct. 1.
In 1999, when Morgan Stanley's contract expires, the fund will rebid that position.
Ameritech taps Manske
Ameritech Corp. named Susan E. Manske CIO, overseeing its $21.5 billion in pension, 401(k) and VEBA assets.
Ms. Manske, who was director-risk management, has been serving as interim CIO since William M. Stephens left early in June to join Husic Capital Management. She will report to Richard W. Pehlke, treasurer.
Pension assets up 8.7%
Total pension fund assets grew to $7.5 trillion at the end of the first quarter of 1998 from $6.9 trillion at the end of 1997, according to the latest flow of funds data released by the Federal Reserve Board.
The data break out assets of private sector defined benefit and defined contribution plans for the first time, but only on an annual basis.
Each grew to $1.8 trillion apiece at the end of 1997. But while defined contribution plans had a net increase in contributions of $88.5 billion, payouts from defined benefit plans exceeded contributions by $2.3 billion in 1997.
Minnesota restricts tobacco
Trustees of the $43 billion Minnesota State Board of Investment voted 4-1 to bar any future investments in companies that derive 15%or more of their revenue from the sale of tobacco products. The investment policy change follows the state's settlement of a consumer fraud suit against tobacco companies.
The fund's current tobacco stock holdings will be kept. "We have some holdings, but it's not a lot," said Howard Bicker, executive director. He couldn't say how much the board has in tobacco stocks.
Schroder Mortgage Associates completed a $200 million securitization of commercial mortgages it managed in a commingled fund and a separate account for the $10 billion San Francisco City and County Employees' Retirement System.
San Francisco contributed 11 whole loans, rated A or better and worth $99 million, to the securitization. The Schroder commingled fund contribution was valued at $126 million.
San Francisco retained a portion of the investment-grade and noninvestment-grade tranches, which the pension fund expects to yield a cash return in excess of 10%
In a related matter, the pension fund terminated AEW Capital Management as its commercial mortgage manager and transferred the mortgages bought by AEW to Schroder Mortgage.
Responses to an RFI were due last week to determine if Schroder or another firm would manage the $50 million AEW had not invested.
REITs get exemption
The Connecticut Legislature passed a bill that would exempt REITs as stocks and permit the $18 billion State of Connecticut Trust Funds to make a significant investment in publicly traded real estate stocks without disrupting the pension fund's asset allocation. The pension fund has a 55%cap on equities. When equity investments exceed the cap, the state treasurer must take profits and rebalance.
"This bill makes it clear that REITs are considered real estate investments," said State Treasurer Paul Silvester, the sole trustee. The bill awaits Gov. John Rowland's signature.
Comerica boosts stake
Lee Munder, chairman of Munder Capital Management, has sold another 38%of his company to Comerica. The bank now holds 88%of all the money management firm's stock. Comerica first purchased half the firm's equity in 1994, forming a partnership that helped Munder break into the defined contribution and mutual fund marketplace.
Mr. Munder will remain chairman for at least two years, a Comerica spokeswoman said. Munder has $51 billion under management.
Liberty buys Crabbe Huson
Liberty Financial is acquiring Crabbe Huson Group for $147.5 million. Ninety percent of the price will be paid in cash; 10%will be in newly issued shares of Liberty Financial common stock.
Crabbe Huson will be a subsidiary, remaining in Portland, Ore., and retaining its name.
Co-founder Jim Crabbe will serve as president and CIO. Richard Huson, who has been on medical leave, will retire shortly after the sale. Liberty has $54 billion under management and Crabbe Huson has $5.3 billion.
Money manager launched
U.K. property firm Dawnay Day, Butlers is launching a money management firm in a 50-50 joint venture with Paul Hopkins, former CIO of IDS Fund Management. Dawnay Day, Butlers Investment Management, which has conditional approval from IMRO, will offer a global equity hedge fund and a traditional pan-European equity product.
403(b) plan restructures
Chicago Public Schools restructured the 403(b) plan for employees, and the number of vendors serving the $1.2 billion plan was reduced to two from six.
Selected were Prudential Investments and VALIC, a spokeswoman said. Prudential will offer the employees fixed annuities and mutual funds; VALIC will offer fixed and variable annuities. The other companies -- Equitable, Great West, MetLife, Security Benefit Life, Travelers and a Kemper affiliate -- will continue to serve current clients, but will not be able to sign up new ones.
KPMG Peat Marwick assisted.
CalPERS up 29.8%
CalPERS saw its U.S. stocks return 48%in the 12-month period ended March 31, according to a report released by the $140 billion system. The strong results boosted CalPERS' overall return for the year to 29.8% more than twice the 11%return between March 31, 1996, and March 31, 1997. CalPERS' investment committee attributed the strong showing to an October board decision to increase exposure to equities.
Its international equity investments returned 20.4% while its alternative investments returned 32.3%
Heitman: No UAM pressure
Heitman Financial's attempt to sell its property management arm has nothing to do with the end-of-year write-off Heitman experienced in connection to a property management acquisition, said Eric Mayer, vice chairman of the Heitman board of directors.
Heitman's parent company, United Asset Management, did not request the sale or pressure Heitman to unload its property management business, Mr. Mayer said. He wouldn't comment on what the firm would do with profits from the proposed sale.
Funds fight Cendant
CalPERS, the New York State Common Retirement Fund and the five New York City pension funds are filing a motion in federal courts in New Jersey, Connecticut and Pennsylvania to be co-lead plaintiffs in shareholder lawsuits against Cendant Corp.
The suits allege Cendant issued false and misleading financial statements to investors about its income and earnings and as a result caused the stock to plummet 47%April 14 -- one of the largest single-day losses for holders of a single stock. The suit also claims former Cendant officers and directors sold or filed to sell more than 4 million shares of the stock before the announcement.
The retirement systems, which own a combined total of 111.7 million Cendant shares valued at $242 million, estimate they lost a total of $89 million because of Cendant's alleged misstatements.
Low price for Chancellor?
AMVESCAP PLC officials wouldn't comment on reports the company paid a lower-than-anticipated price for LGT Asset Management because of continued client defections at Chancellor LGT Asset Management. AMVESCAP valued the three LGT asset units at $1.3 billion Jan. 30, but sources say it paid just more than $1 billion because of client losses.
Chancellor, which has been renamed INVESCO (NY), lost about $8 billion in U.S. institutional tax-exempt assets under management between Dec. 31, 1996, and March 31, when it had $20.2 billion. The resulting decline in fees is believed to have led to a renegotiation of the sale price.
Silton joins Legg Mason
Andrew Silton has been hired as COO and executive vice president for Legg Mason's asset management group, a new position.
Mr. Silton formerly was president of TradeStreet Investment Associates and chief investment strategist for NationsBank.
Legg Mason now has nine asset management units that collectively manage $71 billion, of which more than $40 billion are U.S. institutional tax-exempt.
The DOL's pension office reached an agreement requiring trustees of the Connecticut Plumbers and Pipefitters pension fund and a former securities broker to pay $2.4 million in restitution and civil penalties for losses the plan incurred from investments in derivative mortgage securities. As part of the settlement, the fund trustees also agreed to set up procedures to monitor the plan's investments. The fund, which has about $150 million in assets, lost more than $3 million in the investments.
The Labor Department had alleged trustees failed to analyze the investment risks associated with the derivative investments, and to establish investment guidelines. The lawsuit also alleged trustees wrongly gave the broker discretion in buying and selling securities.