Capital West Asset Management became a subsidiary of Duff & Phelps Investment Management, Chicago. The Phoenix Cos., parent of both firms, wanted them to share resources for investment operations, said Sharon Bray, a Phoenix spokeswoman. Each will continue to manage money independently and retain their individual names.
John Riddle, CEO and CIO of Denver-based Capital West, was named president and CIO of the newly combined entity. The CEO title has been eliminated, said Ms. Bray. Mr. Riddle replaces David A. Chalupnik, who was CIO of Duff & Phelps until October, when he became head of equities at U.S. Bancorp Asset Management. Mr. Chalupnik handled the duties of president at Duff & Phelps but did not hold the title, she said.
Harvard, Templeton settle dispute over fund management
BOSTON - Harvard Management Co., which runs the $18 billion Harvard University endowment, Boston, and Templeton Asset Management reached a settlement in their dispute over the management of the Templeton China World and Templeton Dragon funds.
Templeton had filed a lawsuit against Harvard as a result of the proxy statement Harvard filed to eliminate the management teams of the two Templeton funds. Harvard responded by filing a counterclaim alleging a breach of fiduciary responsibilities. Both suits have been dropped as part of the settlement.
Harvard also agreed to withdraw its shareholder proposals against the two Templeton funds. Templeton agreed to open-end the closed-end China World Fund and offer an in-kind distribution feature, and to make a cash tender offer for 15% of its outstanding shares on the Dragon Fund at 92.5% of net asset value per share.
Pennsylvania Employees drops J.P. Morgan Fleming portfolios
HARRISBURG, Pa. - Pennsylvania State Employees' Retirement System terminated J.P. Morgan Fleming Asset Management, which ran $175 million in active domestic fixed income and $126 million in a structured stock selection portfolio, because of performance and management changes.
The fixed-income assets were moved to the $20.3 billion system's other active domestic fixed-income managers, increasing each firm's portfolio to $250 million: Mellon Bond Associates received $75 million; and Goldman Sachs Asset Management and NISA Investment Advisors received $50 million each. The stocks in the structured portfolio were sold and the proceeds moved into cash.
"We are very disappointed to lose those mandates and are working on the performance issues for those products," said Carolyn Jones, J.P. Morgan Fleming spokeswoman.
Separately, the system also terminated Clifton Group Investment Management, which ran $107 million for the system in a derivatives-based core fixed-income portfolio with an S&P 500 futures overlay. The money will go to cash. "We delivered returns that were in line with expectations put forth by the program at the account's inception. We believe the fund shifted its objectives," said Jack Hanson, chief financial officer of the Clifton Group.
Rocaton Investment Advisors assisted.
CalPERS appeals exemption ruling to state high court
SACRAMENTO, Calif - CalPERS asked the California Supreme Court to overturn a state appellate court decision that the retirement system did not have authority to exempt certain employees from civil service rules and to set their pay levels.
The $134 billion California Public Employees' Retirement System claims that Proposition 162, enacted by California voters in 1992, gives the fund full "plenary authority" to administer the system and keep it from legislative and executive branch interference.
The Third Appellate District Court's Jan. 30 ruling affects up to 33 CalPERS employees who are exempt from civil service rules, including 10 internal portfolio managers. Hiring for one vacant position has been put on hold, said Pat Macht, CalPERS spokeswoman. The ruling also concerns all other California public pension funds, according to CalPERS' March 11 brief to the California Supreme Court.
Separately, the retirement system reported it underperformed other large pension funds last year. CalPERS returned -9.5%, compared with the -9.1% median for the Wilshire Associates large fund universe. Underperformance primarily came from corporate bonds, currency overlay and real estate, according to data from consultant Wilshire and CalPERS staff. Total fund attribution revealed active management lost 1.3% in 2002, almost all of which came from the fund's corporate bond exposure.