San Francisco City & County Employees’ Retirement System will revamp part of its $1.3 billion international core equity allocation, study currency management and consider altering its emerging markets allocation. A $475 million core international portfolio managed by Oechsle International Advisors will be split evenly; one part will be retained by Oechsle but converted to a concentrated portfolio of 25 to 40 stocks, while Nicholas-Applegate will run the remainder in a core portfolio with a growth bias. Capital Guardian will retain its less aggressive $826 million core portfolio.
At the urging of trustee Joseph Driscoll, the board for the $12 billion system also voted Tuesday to review recent currency studies and find an active currency manager to determine whether such management would have enhanced returns for the fund in the past. Currently, Oechsle is the system’s only international equity manager that handles currencies as part of its strategy; the system has nearly $2 billion invested in foreign stocks.
In addition, trustees voted to evaluate the fund’s emerging markets exposure because Oechsle and Nicholas-Applegate are authorized to make substantial investments in the area; Oechsle’s previous core-plus mandate was limited to a 10% emerging-markets exposure. The review could affect a $240 million emerging markets portfolio managed by Capital International.
InvestorForce was the consultant.