Fund may sue manager
San Bernardino County (Calif.) Retirement Board will hire outside counsel to pursue a lawsuit against Advanced Investment Management, claiming the firm violated the $3.2 billion fund's investment guidelines, resulting in a $55 million loss, said Timothy Barrett, executive director and CIO. "They (AIM) violated our guidelines," he said. "We feel very strongly there is a case."
Advanced Investment Management managed $498 million in an enhanced S&P 500 fund for the plan until it was terminated earlier this month, he said. J. Thomas Allen, president and CEO at Advanced, said such a suit "would be ... without merit".
More limits on IRS?
Rep. Bernard Sanders, I-Vt., is expected to introduce an amendment barring the IRS from using any money to issue guidance or regulations that would violate age discrimination provisions in tax and federal pension laws, or permit employers to retroactively cut benefits owed to participants.
The amendment also would forbid the IRS from using any federal funds for issuing new guidance on cash balance plans that would revoke guidance issued in 1996, which required plan sponsors to compute benefits owed to cash balance plan participants by calculating the net present value of benefits at retirement age.
Florida hires Callan
The $84 billion Florida State Board of Administration hired Callan Associates as a specialty consultant to advise on all asset classes, said Coleman Stipanovich, interim executive director. Ennis Knupp is general consultant to the $84 billion system.
Separately, the system changed its domestic equity benchmark to the Russell 3000 from the Wilshire 2500 index and adopted relative performance benchmarking using the Trust Universe Comparison Service to compare performance against peers at the total fund and asset-class levels.
Boston Partners sells stake
Robeco Group will acquire a 60% stake in Boston Partners Asset Management. Terms were not disclosed. Boston Partners will continue to operate autonomously.
Maryland drops 2
The $26 billion Maryland State Retirement and Pension System terminated Credit Suisse Asset Management, which ran $833 million in active international equities, and GEM Capital Management, which handled $240 million in convertible bonds, said Joe Coale, spokesman. The money was shifted to internally managed Treasuries, he said. System officials wanted to bring the plan's fixed-income allocation closer to its 35% target.
Fund may ditch DeAM
Chicago Public School Teachers' Pension and Retirement Fund is conducting a short-list search for a possible replacement for Deutsche Asset Management, its international active growth equity manager, said Kevin Huber, CFO for the $9.2 billion fund. Mercer Investment Consulting will present trustees with a list later this month, but also may consider retaining DeAM.
US Air names fiduciary
US Airways hired Aon Fiduciary Counselors as an independent fiduciary for the company's stock, held in several defined contribution plans. US Airways was fiduciary for the employer stock option in US Airways' $575.2 million 401(k) Savings Plan, $461.4 million 401(k) Savings Plan for Pilots, $808 million Employee Savings Plan and the $40.8 million Piedmont Aviation Inc. Supplemental Retirement Plan. Asset sizes are as of Dec. 31.
Private equity hires
The $1.5 billion Kern County Employees' Retirement Association committed $50 million to Abbott Capital Management and $25 million to Pantheon Ventures for their private equity funds of funds, said David Deutsch, executive director. Funding will come from reducing a $167 million S&P 500 index fund run by Barclays Global Investors.
Also, BGI was hired to run a $100 million alpha-tilt enhanced S&P500 index fund. Funding came from terminating a $60 million Fidelity enhanced S&P500 index fund the remaining $40 million came from the BGI S&P 500 fund.
Fund lowers equities
The $14.4 billion Illinois Municipal Retirement Fund lowered its domestic and international equity target allocations to 41% from 44% and to 15% from 17%, respectively, said Walt Koziol, director of investments. The fixed-income allocation increased five percentage points to 36%. The changes resulted from an asset-liability study. Mercer assisted.
Ford's assets fall
Ford Motor Co.'s pension assets declined by 6.7% in the first six months of the year, and its U.S. plans are about $3.2 billion underfunded, Ford officials said during an earnings presentation to analysts. Ford began the year overfunded by $600 million, which lessened the impact of market losses, said David Reuter, the company's financial news manager.
Ford officials said if present conditions continue and if the full year's loss in 2002 is 6.7%, pension expenses next year likely will increase by about $125 million. Under the current scenario, Ford officials do not anticipate having to make a pension contribution until 2006, analysts were told.
Ford had $35.8 billion in defined benefit assets as of Dec. 31.
Manager review set
The $330 million New Orleans Employees' Retirement System is reviewing its cash and short-term fixed-income managers, said Jerry Davis, board chairman. Officials will pay special attention to the $12 million Quantum/Gabelli Short-Term Intermediate Bond Portfolio and the $22 million in cash managed by a partnership between Quantum Investments and Mario Gabelli because the board is concerned about the low rate of return on both products, considering the plan's high liquidity needs, he said.
Northrop income down
Northrop Grumman reported a sharp drop in pension income to $23 million for the quarter ended June 30, down from $91 million in the same period a year earlier. For the six months ended June 30, the company reported pension income of $47 million, down from $160 million for the same period a year earlier. The company has $13.9 billion in defined benefit assets.