Illinois slates review
The $7 billion Illinois State Board of Investment hired Hewitt Associates to review its $1.5 billion international equity portfolio.
The review is needed after trustees changed the 10%each strategic international and global equity asset allocations to a straight international equity allocation of 20% said Jane Patterson, executive director of the fund.
It is not known if the review will prompt searches, but global managers still would be allowed to manage the portfolio, although their holdings in U.S. could change to meet the benchmark of the Morgan Stanley World ex-U.S, she said. Current global managers are Templeton, Cursitor Eaton and Brinson. Existing international managers are Schroder, Walter Scott and Delaware.
The review is expected to be finished by February.
Watch list action
The $4.5 billion District of Columbia Retirement Board agreed to remove LM Capital from its watch list, to keep Sasco Capital on the list for another two quarters, and to place Woodford Gayed and Cowen Asset Management on the list for two quarters for performance-related reasons, said Sheila Morgan Johnson, CIO.
Officials at Cowen and Woodford did not return calls seeking comment.
The pension fund also approved an asset allocation model for the assets it will continue to manage after the bulk is transferred to the federal government: 40%domestic stocks; 20.7%international stocks; 1%cash; 28.3%core domestic fixed income; and 5%private equity.
The fund will eliminate a 7.5%allocation to international fixed income, 5%to high-yield bonds and 1.5%to real estate.
2nd suit against Microsoft
A group of several thousand workers at Microsoft filed a class-action lawsuit against the company, seeking 401(k) and other benefits denied to them.
The workers, because they were considered temporary employees or independent contractors, were excluded from benefits Microsoft employees received.
The suit, filed in mid-November in U.S. District Court in Seattle, seeks to include the group with another group of some 800 workers in a lawsuit pending against Microsoft on the same issues since 1993, or seeks to have their case tried separately.
David Stobaugh, a partner with the law firm representing both groups, said only estimates of the number of workers in the two groups is available.
Microsoft representatives couldn't be reached for comment.
Realty deal set
Union Labor Life and Pacific Capital Group completed a deal to purchase a 27%interest in the Los Angeles Playa Vista real estate development project, where DreamWorks SKG plans to build its motion picture and TV studio.
Goldman Sachs and Morgan Stanley each hold 27% while Oaktree Capital has most of the remaining interest in the 1,087-acre commercial and residential development, believed to be the largest mixed-use real estate development in Los Angeles.
Funds investing in the Playa Vista development are: Bricklayers & Trowels Trades International Pension Fund; Carpenters Pension Fund; National Electric Benefits Fund; and United Association of Plumbers and Pipe Fitters.
Brown taps Standish
Brown Group Inc. hired Standish, Ayer & Wood to manage a $100 million equity options overwriting portfolio previously managed by J.P. Morgan, said Andrew Rosen, treasurer overseeing the $200 million pension plan.
The change was a result of J.P. Morgan phasing out its options-based portfolio protection investment management.
Alex Trower, a spokeswoman for J.P. Morgan, said the firm asked its portfolio protection clients to either shift to Morgan's tactical asset allocation program, or find an alternative.
J.H. Ellwood & Associates was Brown's consultant on the change.
Stride-Rite hires
Stride-Rite Corp. hired Oppenheimer Capital to run a $10 million large-cap value equity portfolio for its $43 million pension fund, said Gordon W. Johnson, assistant treasurer.
Funding will come from a reallocation.
Watson Wyatt assisted.
Nevada hires Scudder
The $11 billion Public Employees' Retirement System of Nevada hired Scudder as an international core equity manager to manage $450 million.
Funding will come from mainly from cash, said Laura Wallace, investment officer.
Callan assisted.
Oklahoma police hire
The $1.1 billion Oklahoma Police Pension & Retirement System hired Fischer, Francis, Trees & Watts as an additional international fixed-income manager.
The $50 million allocation will come from reducing a $71.4 million global fixed-income portfolio run by Sovran Capital Management.
Mercer is retained
The $1.1 billion City of Los Angeles Board of Deferred Compensation rehired William M. Mercer as full-retainer consultant. Mercer rebid on the plan and was selected from four finalists, said Steven Montagna, management analyst.
New cash bonus plan
Watson Wyatt Worldwide has figured out a way employers with overfunded pension plans can sop up excess assets. Watson created the "Stay for Pay Plan" which rewards employees that stay in their jobs for specified periods of time.
The plan pays out large cash bonuses to targeted employees as they hit specified milestones. For example, a high-tech company anxious to keep employees might pay out six months' salary to those who stay for five years. Employees who quit their jobs before they complete five years would get nothing.
The plan differs from traditional cash bonus plans because it allows employers to deduct the amounts they give out immediately, but employees can defer taxes until they actually receive the cash. And because the plan is funded through a pension trust, employees can defer taxes by rolling the money into an IRA or a company-sponsored retirement plan.
Sabo named Founders CEO
Richard W. Sabo was named president and chief executive of Founders Asset Management. He previously was a senior vice president and regional director for Prudential Securities.
Mr. Sabo replaces Jonathan F. Zeschin, who left in July and since has formed JZ Partners, a mutual fund and financial company consulting company.
Federated in Germany
Shareholders of Federated Investors and LVM-Versicherungen, a German insurer, approved formation of a joint venture company, Federated Asset Management GmbH, that will manage, distribute and market a family of mutual funds beginning with LVM's insurance customers. Federated GmbH also will manage separate accounts for German institutional clients.
The new company will be located in Frankfurt and will manage 1.5 billion deutsche marks (U.S.$880 million) in separate account business from LVM. Federated's international/global investment operation in New York will be responsible for investment management.
Kansas hires consultant
The $8.6 billion Kansas Public Employees' Retirement System hired Pension Consulting Alliance to replace William M. Mercer as its consultant.
Park Place picks Fidelity
Park Place Entertainment hired Fidelity to manage the investments of its 401(k) plan, said Al Church, vice president-human resources. The company, which was spun off from Hilton Hotels, expects to receive $100 million in assets for its new plan in the split Jan. 1. The plan may give participants eight investment options, although the company is still deciding the final makeup.
Ikenberry joins boards
Stanley O. Ikenberry, president of the American Council on Education, has joined the separate boards of overseers for the TIAA and CREF divisions of the $220 billion financial services organization. The boards monitor the operations of the companies to assure they are in compliance with their charter purposes.
