SANTA ANA, Calif. -- The board of the $4.2 billion Orange County Employees Retirement System voted to restructure the fund's domestic equities, said Farouki Majeed, chief investment officer.
The board set new domestic equity target allocations of: S&P 500 index, 34%, up from 29.7%; large-cap growth, 24%, up from 22.5%; large-cap value, 24%, down from 35.2%, midcap, 6%, down from 12.6%; and small-cap, 12%, a new equity asset class for the fund.
Under the new policy allocation, high-yield bond exposure will be limited to 20% of domestic bond assets, down from 30%. The target allocation to U.S. bonds will remain 38% of total assets.
The Orange County fund board also placed Schroder Capital on a six-month watch list for the performance of the $246 million EAFE portfolio it manages for the system.
OCERS will initiate a search for a new small-cap growth manager for the $75 million portfolio formerly managed by Amerindo, which was terminated in April. Pilgrim Baxter recently was hired to manage a yet-to-be-funded small-capitalization value portfolio.
Los Angeles City has new alternatives strategy
LOS ANGELES -- Los Angeles City Employees' Retirement System board adopted a summary strategy and guidelines for its alternative investments.
Under the new guidelines, the system added a commitment target that it set at 4%, or one percentage point above the target allocation.
Currently, LACERS has $162 million committed to alternative investments with $60 million funded, said Dan Gallagher, CIO. A 3% allocation would equal $198 million.
A preliminary draft of the summary by the $6.6 billion system's alternative investments consultant, Pathway Capital, included an option that could have given Pathway full discretion when choosing investments for the system. That option was not included in the final draft adopted by the board.
Massachusetts PRIM terminates stock manager
BOSTON -- The $23 billion Massachusetts Pension Reserves Investment Management Board terminated ValueQuest/TA because the manager no longer was "a good fit for us," said Scott Henderson, PRIM executive director and general counsel.
ValueQuest managed $328 million in large-cap value domestic equity.
The firm was hired in 1993 with the Wilshire Large-Cap Value index as a benchmark. PRIM switched all large-cap managers to the S&P 500 benchmark in 1996 and began to limit the use of active large-cap managers, Mr. Henderson said.
ValueQuest's assignment will be placed temporarily in a State Street Global Advisors' S&P 500 index portfolio.
Meanwhile, PRIM executives expect to pay an annual salary of between $100,000 and $130,000 to the new CIO, an increase over the $90,000 it paid former CIO Collette Chilton, Mr. Henderson said.
Ms. Chilton left the board in February to join Lucent Technologies.
There have been 50 to 75 expressions of interest so far, Mr. Henderson said, and he hopes the search committee will be able to recommend a finalist at the September board meeting.
Burridge Group buys stake in Seattle firm
CHICAGO -- The Burridge Group LLC, Chicago, has acquired Sound Capital Partners, Seattle, a large-cap growth equity manager that was part of Bank of America until April.
Terms of the acquisition were not disclosed.
Sound manages $200 million, of which the majority is tax-exempt; it also subadvises U.S. equities in foreign mutual funds.
The firm's six-member investment team had been seeking a strategic and financial partner since BofA closed the Seattle office earlier this year. The team was originally an investment arm of SeaFirst Bank, which was acquired by BofA in 1983.
Burridge will provide Sound Capital with marketing and back office functions. Sound Capital will remain in its Seattle office and operate as a division of Burridge Group. Burridge will create a business structure that will allow Sound's investment professionals to retain ownership in the firm.
Burridge is 55% owned by Affiliated Managers Group.
Pru, Mitsui Trust will sell investment trust products
TOKYO -- Prudential Investments announced an agreement in principle to form a 50-50 joint venture with Mitsui Trust to develop and sell investment trust products -- the equivalent of U.S.-style mutual funds -- in Japan.
The new venture will be named Prudential-Mitsui Trust Investments Co. Ltd. and will be based in Tokyo.
Mitsui Trust will provide the new company with access to a large, affluent retail Japanese client base through its branch system of financial planners. Prudential will bring provide investment management.
Prime Advisors sells minority stake to Mellon
KIRKLAND, Wash. -- Mellon Bank Corp. acquired a minority interest in Prime Advisors, which manages about $2 billion in property and casualty insurance assets.
Prime, which uses proprietary analysis to customize investment portfolios, will be the eighth boutique managing institutional assets in Mellon's Dreyfus Institutional Investors umbrella. Of the eight, Prime and Pareto Partners are the only managers not majority owned by Mellon.
Watson Wyatt acquiring KPMG business in 3 cities
WASHINGTON -- Watson Wyatt Worldwide plans to acquire KPMG Peat Marwick's Boston, Cleveland and New York City actuarial, retirement and investment consulting businesses, the two firms announced.
The acquisition will be effective Aug. 1. The businesses have an annual revenue of $15 million.
The acquisition includes a number of KPMG Peat Marwick partners, according to a Watson Wyatt announcement.
"This acquisition of KPMG's benefits consulting practice fits tightly with our strategy of focusing on our own core strengths and will enable us to expand our reach in critical Northeast markets," said Pete Smith, president and chief executive of Watson Wyatt.
Hospitals' 401(k) plans probably will be merged
CHICAGO -- The 401(k) plans of Michael Reese Hospital and Grant Hospital, both in Chicago, may be merged as a result of the hospitals' merger with Doctors Community Healthcare Corp., Scottsdale, Ariz.
A spokeswoman declined to reveal the size of the plans.
Doctors Community agreed earlier this month to purchase a majority stake in the hospitals from Columbia/HCA Healthcare Corp., Nashville, for $60 million.
In addition, the combined hospitals soon will begin a search for a CFO. Currently, Steve Frantz is CFO of Grant Hospital and Roger Faculak is CFO at Michael Reese. Both will be considered, but it's likely a new CFO will be chosen, the spokeswoman said.
TIAA starts trust company for financial planning
NEW YORK -- Teachers Insurance and Annuity Association-College Retirement Equities Fund is launching TIAA-CREF Trust Co.
The new federal savings bank also will be an SEC-registered investment adviser, offering financial planning, asset management and administration of trusts and probate estates.
Joseph J. Gazzoli will be president and CEO of the new company, which was developed in response to requests from participants for estate planning and trust administration services. Mr. Gazzoli previously was executive vice president of Boatmen's Trust.
In another development, TIAA-CREF Real Estate Account topped $1 billion, company officials announced last week.
To date, about 50,000 participants in the defined contribution plans of universities, colleges and research institutions have selected the Real Estate Account as an investment option.
TIAA-CREF's strategy for the fund is to directly purchase income-producing properties, rather than REITS. As of June 30, a total of 37 properties had been purchased; 42% of the portfolio was invested in the office sector, 29% in multifamily properties, 21% in the industrial sector and 8% in retail.
Boston Partners closes all-cap, midcap products
BOSTON -- Boston Partners Asset Management has stopped taking new all-capitalization premium equity accounts because assets have reached $1 billion in that style.
The all-capitalization strategy was launched in June 1995 and offered only to institutions.
The firm also has closed its midcap value equity strategy at $1.5 billion in assets, which has been offered to institutions since May 1995.
Lend Lease is newest name of Equitable-Yarmouth group
NEW YORK -- ERE Yarmouth, the U.S. real estate investment company of Lend Lease Corp., has changed its name to Lend Lease Real Estate Investments.
Lend Lease bought Equitable Real Estate in 1997 and merged the investment firm with its Yarmouth group.