Illinois Teachers Retirement System, Springfield, approved its second major asset allocation restructuring since late 1999. The $22.6 billion system raised its domestic equity allocation to 41% of total assets, from 30%; decreased its international equity exposure to 15% from 20%; and cut its fixed-income allocation to 23%, from 27%. The systems other allocations are 14% real estate, 6% private equity and 1% short-term investments. Real estate had had an 8% target allocation but was never reduced.
Trustees, staff and the plans consultant, Gordon Dickinson of Callan, will review and restructure every asset class, starting with U.S. equities at the system boards May 16 and 17 meeting, said Charles Self III, chief investment officer. Money manager changes may result: "Everything is on the table, Mr. Self said. Other asset classes will be reviewed later in 2002 and into 2003, and manager changes may follow.
Separately, Morgan Stanley was terminated for an $180 million allocation to small-cap and midcap equities because of performance and concerns about organizational stability, Mr. Self said. The assets will be managed temporarily in a State Street Global Advisors S&P 500 index fund. Brett Galloway, Morgan Stanley spokesman, declined to comment.