INDIANAPOLIS - The Indiana Public Employees' Retirement Fund will be reallocating nearly $3 billion of its $10 billion in assets as its moves aggressively to specialized active domestic equities, global equities and alternative investments.
According to Patricia J. Gerrick, chief investment officer, the fund expects to launch searches this month for global active core equities and global active growth equities. The fund plans to allocate about $200 million to each class.
The fund also hired four managers for concentrated active domestic equity portfolios, generally of about 20 to 30 stocks each. Sands Capital Management Inc., Arlington, Va., and Turner Investment Partners Inc., Berwyn, Pa., will be allocated $250 million each for large-cap growth. Merrill Lynch Investment Managers, Plainsboro, N.J., and Osprey Partners Investment Management LLC, Shrewsbury, N.J., will be allocated $300 million and $200 million, respectively, for large-cap value.
For domestic active equities, the fund hired:
* Brandes Investment Partners LP, San Diego, for midcap value, assigning it $265 million;
* Strong Capital Management Inc., Menomonee Falls, Wis., midcap growth, $135 million;
* Brown Capital Management Inc., Baltimore, small-cap to midcap growth, $155 million;
* TimesSquare Capital Management Inc., New York, small-cap growth, $170 million;
* Progress Investment Management Co., San Francisco, small-cap growth, $170 million; and
* Osprey and Numeric Investors LP, Cambridge, Mass., both for small-cap value, assigning $220 million and $150 million, respectively.
Alternative commitment
The fund also made its first alternative investment commitment, assigning $50 million to Lindsay Goldberg & Bessemer LP, New York, a middle-market buyout specialist. The fund plans to allocate 5% to alternative investments over the next few years.
In addition, the fund plans to conduct asset-liability and asset allocation studies later this year. It hired Milliman & Robertson Inc., Radnor, Pa., to conduct an actuarial audit, said E. William "Bill" Butler, executive director.
"It could change the allocation," said Ms. Gerrick. "It's more predicated on a change in liabilities. The audit is designed to see if the liabilities we are using for our asset allocation are correct."
Mercer Investment Counseling, Chicago, will assist in the asset allocation study, as it will in the pending searches. It assisted in the other changes as well.
The moves are part of the fund's effort to diversify and develop a more sophisticated investment structure, an outgrowth from the 1997 authorization that first allowed it to invest in equities.
Funding for the allocations to global equities, domestic concentrated equities and the Brandes hiring hasn't been determined yet, Ms. Gerrick said.
For the small- and midcap portfolios, assets will come from terminating J.P. Morgan Fleming Asset Management, New York, which ran $250 million in active domestic core small-cap equities, and terminating Utendahl Capital Management LP, New York, which ran $150 million in domestic active core fixed income.
Also, it will reduce the assignment of Dimensional Fund Advisors Inc., Santa Monica, Calif., to $200 million from $800 million. The firm manages a domestic small-cap value-tilted index fund.
