'Pain' of the week
"We've all gone through a little pain this week," Rica Jandrain, chief investment officer for equities at Banc One Investment Advisors, said just after the stock market closed Friday.
The Dow Jones industrial average plunged almost 267 points to close at 10,019.71. The S&P 500 was down 36.11 points, ending at 1,247.41.
Fed Chairman Alan Greenspan's dire warning of "sharp reversals in confidence" acted as a self-fulfilling prophecy, money managers said.
Mr. Jandrain might be down, but believes, "You still have good earnings, there's still a good economy . . . There's no reason to believe the stock market can't come back."
LA County picks BGI
The $24.8 billion Los Angeles County Employees Retirement Association hired Barclays Global Investors to run its $8.2 billion domestic and international passive equity portfolios.
BGI replaces Deutsche; county officials had been concerned about staff defections at Deutsche.
The $18 billion State of Connecticut Trust Funds may issue a "mini-RFP" for an alternative investment consultant if a July RFP for a general consultant fails to identify enough candidates.
"Consultants with alternative investment expertise may not have seen the RFP because it was in the general consultant framework," said Howard Rifkin, deputy treasurer. "We may go out with a mini-RFP to cast the net a little more widely."
In another matter, state Treasurer Denise Nappier asked the State Ethics Commission to determine if the state's ethics code was violated in connection with former Treasurer Paul Silvester's guilty plea last month to charges of money laundering and bribery.
"I have become quite concerned that my office may be unknowingly and unwillingly violating the state ethics code by continuing business relationships with individuals or entities that made contributions to my predecessor's campaign in violation of Connecticut's general statutes," Ms. Nappier said in a written statement.
She wants to know if she has the authority to cancel contracts or seek reparations from firms that made illegal contributions to Mr. Silvester's campaign.
Dutch fund sets study
The 3 billion Dutch guilders ($1.4 billion) Stichting Pensioenfonds Openbaar Vervoer plans an asset allocation study after handing the management of its assets to money manager SPF Beheer. Local insurer Centraal Beheer previously reinsured the plan's liabilities, said Dick van Setten, secretary to the plan's board of trustees. The money manager will administer the plan for Dutch bus drivers and manage the assets beginning in January.
Turner 401(k) gets new look
The $3 billion 401(k) plan at Turner Broadcasting System is adding a mutual fund window with 94 SEC-registered funds, and is replacing three core funds, said Lisa McMichael, director of employee benefits. The new options will be S&P 500 index, large-cap and small-cap funds, all from Fidelity, Turner's bundled provider, Ms. McMichael said.
The $2.4 billion Georgia-Pacific pension fund terminated Global Asset Management and is reallocating the $37 million it managed in international equities.
John Stettler, vice president-benefit investments, said Capital Guardian will receive $10 million to add to a $26 million international equity portfolio. The rest of the GAM allocation will be placed in a stock and bond futures liquidity account managed by INVESCO. Poor performance and the departure of portfolio manager John Horseman prompted the change. Representatives from Global Asset Management did not return phone calls for comment.
Florida boosts international
The $93 billion Florida State Board of Administration is changing its asset allocation, said Tom Herndon, executive director.
International equities will be raised to 12% from 8%, domestic equities will be cut to 55% from 58%, and domestic fixed income will be cut to 25% from 26%. The remainder is divided among alternatives, cash and real estate.
In addition, the system will create a new asset class for alternative investments, which will include the current private equity portfolio. The new asset class will have a separate staff, and those positions could be filled from within, Mr. Herndon said.
The board also approved new benchmarks - the MSCI All Country World Free index, excluding the United States for international; the Wilshire Real Estate Securities index and the consumer price index plus 450 basis points for realty; and for private equity, a premium of 600 basis points above the domestic equity target return.
NY State makes changes
The $115 billion New York State Common Retirement Fund added $100 million to its active/ passive international equity portfolio with Baring Asset Management and $50 million to an emerging markets fund with Templeton Investment. Baring now runs $1.4 billion, with Templeton running $574 million. Funding for the moves came from cash flow. The fund also made two private equity commitments: $100 million to Oaktree Capital Management's Opportunities III; and $150 million to Hellman & Friedman Capital Partners III. It also made a commitment with Union Labor Life Insurance Co. to participate in a $37 million mortgage for a retail and theater complex in Central Islip, N.Y.
Illinois Teachers to meet
The $22 billion Teachers' Retirement System of the State of Illinois will review its manager structure and may make changes at its Oct. 28 and 29 board meetings, after the approval of a new strategic asset allocation, said Keith Bozarth, executive director. In July, the board changed the U.S. equities allocation to 30% from 35%; international equities, to 20% from 14%; U.S. fixed income, to 27% from 31%; real estate, to 8% from 10%; and private equity, to 7% from 3%. Strategic Investment Solutions assisted and will recommend possible manager changes.
The $5 billion Delaware Public Employees' Retirement System trimmed its exposure to convertible securities by terminating Pecks Management Partners, which had run $50 million, said Dale Stratton, chairwoman of the board of trustees. The assets were split evenly between the pension fund's remaining convertible managers, Froley, Revy Investment and Oaktree Capital Management, said Ms. Stratton. Pecks' performance wasn't good relative to that of the other convertible managers, but the firm also was penalized because its small-cap style was out of favor, said Ms. Stratton. Pecks Chairman Arthur Berry declined to comment.
The pension fund committed $25 million to Advanced Technology Ventures IV and $20 million to Trident Capital Fund IV.