Ennis Knupp + Associates is urging clients to abandon narrowly defined specialized U.S. equity portfolios, adopting instead a combination of indexed strategies and broad-based "whole-stock portfolios” for domestic equities. If widely adopted, the recommendation would reverse a 20-year-plus trend in institutional money management toward specialization, could involve reallocation of billions of dollars in domestic equity assets, and would eliminate such categories as small-cap value or large-cap growth stocks. The $7.5 billion Maine State Retirement System, Augusta, is studying Ennis Knupp’s proposal but will not make any decision until well into 2001, said David Wakelin, board chairman.
Ennis Knupp consultants propose a three-pronged approach:
-- In general, clients would increase passive investments to 70% to 80% of domestic equities; currently, Ennis Knupp clients tend to have about 55% to 60% of assets passively tracking benchmarks.
-- The firm intends to build a list of 10 to 15 active preferred managers capable of running "whole-stock” portfolios. An RFP has been posted on Ennis Knupp’s website, www.ennisknupp.com/satellites/infoformgers_whole.html.
-- A single fee will be negotiated with preferred managers for all Ennis Knupp clients, regardless of their individual sizes.
