Illinois State Board of Investment, Chicago, hired BlackRock, Western Asset Management and Harris Investment Management to run the $7.5 billion system's first external core bond portfolios, said Jane R. Patterson, executive director.
BlackRock and Western Asset Management will run $500 million each, and Harris will handle $200 million. The portfolios will consist mostly of U.S. investment-grade securities, but with latitude to invest up to a total of 30% in high-yield and non-dollar fixed-income securities, including those issued in emerging markets. They will be benchmarked to the Lehman Aggregate Fixed Income index.
The move was prompted by the impending retirement at the end of the year of Larry G. Darlington, senior portfolio manager, who oversees the internal management of $2 billion in fixed income. He will be replaced by Phillip Schutt, currently a fixed-income portfolio manager. The system will continue to manage about a third of its fixed-income allocation internally.
Hewitt assisted in determining whether to move to external management, but the board conducted the search internally.