San Francisco City & County Employees Retirement System, with $12 billion in assets, hired Fischer, Francis, Trees & Watts to run $700 million in core global bonds and Bridgewater Associates to manage $200 million in opportunistic bonds, said Dick Piket, senior investment officer-fixed income.
The portfolios will be managed against the Lehman Global Aggregate index on a fully hedged basis, which includes corporate bonds and mortgages; the previous benchmark was the Salomon Brothers World Government Bond index. Brinson Partners and Merrill Lynch, which manage $407 million and $311 million in global bond portfolios, respectively, were finalists for the new mandates.
Because the new benchmark includes corporate high-yield bonds, existing high-yield bond managers W.R. Huff and Oaktree will see their portfolios of $163 million and $290 million, respectively, reduced by undetermined amounts. Additional assets likely will be shaved off equities as well to fund the increased allocation to global bonds.