PASADENA, Calif. -- The Los Angeles County Employees Retirement Association board approved a real estate development strategy permitting the fund to invest in development projects for the first time.
The fund's four existing core investment managers, which oversee more than $500 million each for the $27.8 billion fund, will manage the new development investments in planned or existing buildings, either under construction or undergoing renovations or expansions. Investment is limited to 10% of the total real estate allocation at any one time, or about $280 million. The Townsend Group assisted.
In other action, the board approved a one-time waiver to guidelines prohibiting non-U.S. investments exceeding 50% of assets in an investment fund, allowing Hamilton Lane Advisors to make a discretionary commitment of $10 million for LACERA to the Providence Growth Investors Fund. The fund will target communications and media companies, focusing on investments of $3 million to $20 million.
The board also approved a commitment of $25 million to the DLJ Phoenix Equity Partners III, subject to the terms and conditions and approval of legal counsel.
The board approved a manager investment plan and minimum return requirements for its newly appointed real estate account manager for apartments, Henderson Investors.
It also directed staff to return by the end of first quarter with a report on the feasibility of establishing a venture capital program targeting investments in emerging companies located in Southern California.
CalPERS to double commitment to realty deal
SACRAMENTO, Calif. -- The California Public Employees' Retirement System agreed to double its commitment in the California Urban Investment Partners to $100 million. CUIP is a partnership between CalPERS and Johnson/MacFarlane Partners that buys and redevelops retail properties in California urban areas.
A proposal to commit $200 million to senior housing was deferred until February. If approved, the $161 billion CalPERS will select managers to create the specialized real estate equity portfolios.
Also, the fund returned 18.2% for the 12-month period ended Sept. 30, virtually tying the median returns of the large-fund TUCS and Wilshire indexes.
During that period, the TUCS universe of $1 billion-plus funds returned a median 18.3% while the Wilshire large fund universe returned 18.2%
CalPERS returned an annualized 15.7% for the three- and five-year periods. In comparison, the TUCS median return was 14.95% and 15.6% respectively; the Wilshire median was 15.8% and 16% respectively.
By Dec. 9, CalPERS' market value had reached $168.5 billion.
Minnesota changes 457 investment groups
ST. PAUL, Minn. -- The Minnesota State Board of Investment has revamped its $609 million 457 plan, said Howard Bicker, executive director of the $50 billion system.
The state now offers employees three investment tracks, Mr. Bicker said: a series of unitized commingled funds, which function like monthly valued mutual funds; seven mutual funds from multiple investment managers; and a mutual fund window for employees who have accumulated more than $5,000 in their accounts.
The plan's previous investment options were the state investment pools and more than a dozen mutual funds with overlapping asset classes.
Fixed-annuity options also were offered by the plan's two administrators, Great West Life and Minnesota Life.
The state reduced the number of third-party administrators to one -- Great West. Employees now receive a single, consolidated statement; previously they had received statements from multiple vendors.
Legislators seek tax-break data
WASHINGTON -- Sen. Daniel Patrick Moynihan, D-N.Y., and Rep. Richard E. Neal, D-Mass., are asking the Treasury Department for information showing which income groups benefit the most from retirement tax breaks.
The lawmakers want to know the breakdown of tax breaks by income group for 401(k) retirement plans, 403(b) plans, 457 plans, individual retirement accounts, Roth IRAs, SIMPLE IRAs and SIMPLE 401(k) plans.
The request follows studies by a Washington think-tank revealing that those in the upper-income brackets would benefit the most from legislative proposals raising the contribution limits.
NYC fund files proposal at Exxon Mobil
NEW YORK -- The New York City Employees Retirement System filed a shareholder resolution asking Exxon Mobil Corp. to adopt an explicit policy barring discrimination based on sexual orientation, said New York City Comptroller Alan G. Hevesi.
The $41 billion system decided to file the resolution after Exxon Mobil announced it had canceled both the sexual-orientation discrimination protections and the domestic partnership benefits that existed at Mobil before the company completed its merger with Exxon.
Trillium Asset Management presented a similar resolution at Exxon's annual meeting earlier in the year.
Peoples Energy rebalances fund
CHICAGO -- Peoples Energy Corp. finished implementing the recommendations from an asset allocation-liability study and rebalanced its $687 million defined benefit plan.
Three portfolios managed by Dimensional Fund Advisors were dropped: a $52 million short-term domestic fixed-income fund; a $24 million passive small-cap equity fund; and a $46 million passive international value equity fund.
The bond fund and part of the small-cap fund were allocated to NTQA's intermediate-term domestic bond portfolio, which now totals $115 million. The remainder of the small-cap portfolio was reallocated to other existing managers.
ADR issuance hits record level
NEW YORK -- Capital raised by overseas firms issuing American depository receipts reached record levels this year, according to a new report by Salomon Smith Barney. Totaling more than $21.2 billion as of Dec. 9, this was an increase of 8.7% from the previous record of $19.5 billion set in 1996. And this year's total was an increase of 121% from last year's total of $9.6 billion.
For companies in emerging markets, capital raised by ADRs surged to $12.7 billion this year, or 60% of the total, vs. $4 billion or 42% of the total in 1998, according to the report. Most of the growth in emerging markets came from Asian companies. The trend in Europe was positive but not as strong in Asia, while Latin America lagged.
New York Common, ULLICO extend program
ALBANY, N.Y. -- The New York State Common Retirement Fund and ULLICO have agreed to continue their co-investment program for commercial mortgages on properties to be built in New York by union-affiliated contractors and workers.
Union Labor Life Insurance Co. and the $115 billion New York State system will each contribute an additional $300 million over the next three years to bring the program's total to $1 billion. They have each contributed $400 million to the program, which started in 1995 and will continue until 2002. The system will fund its contribution from cash reserves.
Court rules Raymark must pay pension funds
BRIDGEPORT, Conn. -- Raymark Industries Corp. must pay the $19 million it owes its two underfunded pension plans, the U.S. bankruptcy court in Bridgeport ruled.
The ruling in a lawsuit by the PBGC ensures that the company, which is being liquidated, cannot walk away from its pension liabilities. The ruling also upholds the PBGC's contention that the company's restructuring in the 1980s was intended to defraud its creditors.
The company had transferred its profitable assets to a new company, Raytech Corp., while leaving Raymark with asbestos-related liabilities and the two underfunded pension plans.
Ohio highway patrol fund invests in Nasdaq fund
COLUMBUS, Ohio -- The Ohio State Highway Patrol Retirement System, Colombus, invested $10 million in a unit investment trust designed to track the performance of the Nasdaq 100.
Trustees for the $700 million defined benefit fund decided to invest in the technology-driven trust because it adds more growth stocks to the fund's portfolio, said Richard Curtis, executive director. Funding came from cash.
Company opts to forgo cash balance conversion
HOUSTON -- Baker Hughes Inc. decided not to switch to a cash balance pension plan for now, said Tony Sanders, director of benefits and corporate human resources. The $220 million in defined benefit plan assets are currently frozen.
"Business conditions do not require us to activate our defined benefit plan," Mr. Sanders said. The company's decision some weeks ago not to proceed with a cash balance plan had nothing to do with the controversy over such plans, he said.
The company also has a defined contribution plan with $1.4 billion in assets.
Missouri school trustees set bond interviews
JEFFERSON CITY, Mo. -- Trustees of the Public School Retirement System of Missouri will interview enhanced bond manager candidates Reams Asset Management and Payden & Rygel Jan. 18, said Craig Husting, chief investment officer for the $21.3 billion defined benefit plan. The firms are vying for a $1.5 billion portfolio that will allow up to 10% to be invested in foreign bonds and up to another 10% to be invested in high-yield bonds.
Tremont Advisors and TAL to do joint venture
Tremont Advisers of Rye, N.Y., and TAL Global Asset Management, Montreal, have signed a letter of intent for a joint venture.
TAL-Tremont, a Canadian-based alternative investment management company, will seek to integrate alternative investment strategies with traditional active and synthetic index investments.
IRA holders slow to make contributions
WASHINGTON -- Only one-quarter of individual retirement account holders are making new contributions to their accounts, according to data from the Employee Benefits Research Institute, Washington.
Only 6.4 million of the 26.1 million IRA holders in 1995 -- the most recent data available from the Internal Revenue Service -- contributed, EBRI reported.
A 1997 law that made more people eligible for traditional IRAs and created the Roth after-tax IRAs should have resulted in more IRA contributions, but data are not yet available to show the impact of those changes.
14% of lendable securities were out during 3rd quarter
About 14% of the estimated $2.7 trillion in lendable securities was on loan during the third quarter, according to a survey by the RMA Committee on Securities Lending.
The breakdown was: U.S. equities, $1.4 trillion; U.S. corporate bonds, $407 billion; non-U.S. equities, $467 billion; U.S. Treasuries, $232 billion; non-U.S. bonds, $136 billion; and U.S. agencies, $73 billion.
The weighted average return on loans was: non-U.S. equities, 74 basis points; U.S. equities, 44; U.S. corporate, 37; U.S. Treasuries, 35; non-U.S. bonds, 25; and U.S. agencies, 23. The survey included information from 18 agent lenders.