TALLAHASSEE, Fla. - State Board of Administration of Florida recommended to trustees of the $725 million Lawton Chiles Endowment Fund, in which the board manages tobacco-litigation proceeds, that they modify the asset allocation, said Tom Herndon, executive director. It will recommend adding new allocations of 12% to international equities, 5% to domestic inflation-indexed bonds and 4% to real estate. Its domestic equities allocation would be reduced to 57% from 60%; fixed income to 21% from 35%; and cash to 1% from 5%.
A second tranche of $375 million from the tobacco settlement, to arrive Jan. 1, will be used to rebalance the endowment, he said. Three more tranches are expected over the next several months, which will raise the endowment's total assets to $1.9 billion.
Los Angeles County
mulls move inside
PASADENA, Calif. - The Los Angeles County Employees' Retirement Association's board has directed staff to study the feasibility of internal management of its $7.9 billion in index funds and, separately, to study the feasibility of enhancing fund returns through hedging.
Currently, officials at the $27 billion fund do not manage assets internally.
The board also approved an amendment to the securities lending agreement between LACERA and Mellon Trust granting the chief investment officer authority to accept or reject any of Mellon's recommendations on making additions or deletions to the list of eligible countries for securities lending transactions. The amendment also requires Mellon to assess borrowers' level of Y2K preparedness as part of its credit evaluation process and to indemnify LACERA against borrower default resulting from Y2K-related problems.
Illinois Municipal nears
decision on manager
OAKBROOK, Ill. - Illinois Municipal Retirement Fund is interviewing three finalists in its search for an enhanced domestic fixed-income manager.
BlackRock, Lincoln Capital and FIRMCO will appear before the $14.5 billion fund's investment committee. A firm may be hired to manage the new $500 million portfolio later this month or sometime in January, said Walter Koziol, director of investment for the fund. Board members are looking at a low-risk approach that can add alpha with low volatility, he said.
The source of funding will be decided in January.
Defined benefit still dominant
in assets, CIEBA study shows
Defined contribution plan assets grew 19%in 1998, but defined benefit plans held about 55%more assets, covered close to 90%more people and paid out about 30%more in benefits than did defined contribution plans, according to a study released by The Committee on Investment of Employee Benefit Assets.
This is the first time the organization of more than 150 of the largest corporate pension funds has made any of the data public, said Jacque Johnson, executive director of CIEBA.
The study also found that 99%of the 130 companies responding to the most recent survey sponsor both defined benefit and defined contribution plans. Only 16%of the companies sponsor cash balance or other type of hybrid defined benefit plans.
Teachers' system sells
building in Little Rock
LITTLE ROCK, Ark. - The Arkansas Teachers' Retirement System sold a seven-story office building in Little Rock to the state for $4.5 million. It had purchased the building and six acres of land surrounding it for $6 million in 1997.
The fund will retain most of the six acres, on which it plans to construct an office building and 800-car parking garage, according to Angelo Coppola, deputy director of the $6.6 billion retirement system.
firm in Mexico
LINCOLNSHIRE, Ill. - Hewitt Associates has acquired Farell Actuarios Asociados, a Mexican actuarial and benefits consulting firm. Terms of the deal were not disclosed.
Farell, which was formed in 1986, will be integrated with Hewitt's Mexico office, allowing Hewitt to expand its consulting expertise in Latin America as well as Mexico.
Also, Hewitt will integrate Swiss consulting partner PRASA, effective Jan. 1. PRASA's offices in Switzerland will become PRASA Hewitt, said Don Minner, public relations consultant.
BRUT network opens
to institutional investor
NEW YORK - The Brass Utility LLC announced institutional investors can now directly participate in BRUT electronic communications network through a broker-dealer subscriber sponsorship.
The service was previously available only to broker-dealers, said Brian Hyndman, president of BRUT. So far, 25 institutional investors have signed up to trade electronically and anonymously.
The ECN has more than 160 broker-dealer subscribers, which trade 30 million shares daily in total.
First Data group
PITTSBURGH - PNC Bank Corp. has completed the $1.1 billion acquisition of First Data Investor Services Group.
ISG will be integrated with PFPC, PNC's global fund services subsidiary, making it the largest full-service mutual fund transfer agent in the United States, according to a company statement. The combined organization will provide full-service mutual fund services to more than 20,000 retirement plans and fund accounting services totaling $346 billion in global fund assets.
The acquisition adds retirement plan servicing and distribution services to PFPC's core operations.
Paine Webber buys
global manager DSI
NEW YORK - Paine Webber Group Inc. acquired institutional quantitative global equity money manager DSI International Management, which will operate as a wholly owned subsidiary of PaineWebber Asset Management Inc., a new holding company.
The purchase price was not disclosed. The acquisition was made as part of Paine Webber's overall growth strategy and to add enhanced index portfolio management capabilities to the firm, according to a company statement. DSI has $5 billion in assets under management.
PaineWebber Asset Management also will be the holding company for Paine Webber Group subsidiary Mitchell Hutchins Asset Management, which has $60 billion in assets under management.
Online advice set
through joint venture
American Express Retirement Services, Minneapolis, and mPower/401k Forum LLC, San Francisco, will offer online investment advice service to defined contribution plans.
American Express will link mPower/401k Forum's retirement planning service to its Web site, allowing plan participants to see fund-specific investment recommendations tailored to the participant's financial situation, risk tolerance and financial objectives.
turnaround on index reporting
STAMFORD, Conn. - InterSec Research is speeding up its reporting and widening the styles of the international indexes it tracks. It will provide full analytics of EAFE portfolios, based on preliminary reports of managers, 10 to 12 days after the end of each quarter. It will now track three new types of investment styles: the All Country World index Free ex-U.S.; EAFE, minus any emerging markets; and EAFE with attribution by industry.
The consulting firm also is taking steps to grab more Canadian clients. It signed an agreement with Robert Boston to offer client service in Canada. Mr. Boston remains president of the Quant Group. Bruce McNabb, a vice president of InterSec, has moved to Chicago and will market to Canadian and western U.S. funds.
New York Life Benefit
offers new options
NEW YORK - New York Life Benefit Services unveiled a series of institutionally priced pooled investment options run by outside managers for defined benefit and defined contribution plans.
The retirement investment series is designed to provide a low-cost investment alternative for medium-sized defined benefit and defined contribution plans. There will be 19 low-expense-ratio portfolios spanning diverse asset classes including cash, bonds, U.S. equities and international equities. Plan sponsors also will be able to choose either an actively or passively managed portfolio within each asset class.
NYL Benefit Services also has enhanced its Web site to allow participants to download their 401(k) information into Quicken and other personal finance software.
The new feature will allow 401(k) participants whose companies use New York Life as their bundled provider to track and analyze their entire retirement portfolios.
Lend Lease acquiring
Franklin Select portfolio
NEW YORK - Lend Lease Real Estate Investments has signed an agreement to purchase all of Franklin Select Realty Trust's real estate assets through its Value Enhancement Fund III, a $450 million real estate fund. Lend Lease will pay approximately $131.5 million less the existing debt of $26.5 million on the portfolio, which consists of seven office and research and development buildings located in California.
ADP, Bank of America
set 401(k) plan alliance
ROSELAND, N.J. - Automatic Data Processing and the Bank of America have formed an alliance to offer a 401(k) program combining ADP Retirement Services' administration services and Banc of America Advisors' investment management capabilities.
The new program, Bank of America 401(k), caters to small and medium-sized businesses and commercial bank clients, offering the Nations Funds family of mutual funds and other well-known mutual fund families.
ADP will oversee enrollment, employee education and communications, record keeping and regulatory compliance testing and reporting.
BNY ESI acquires
NEW YORK - BNY ESI & Co. has purchased a brokerage subsidiary of Investment Performance Services LLC, a consulting firm for institutional investors.
Terms of the deal, which requires regulatory approval, were not disclosed.
The subsidiary, Institutional Securities Trading LLC, targets Taft-Hartley pension plans, endowments and foundations, BNY ESI said in a statement. BNY ESI, a subsidiary of The Bank of New York and a separate brokerage, has more than 200 institutional tax-exempt investors as clients.