Illinois Teachers' Retirement System, Springfield, will invest about $3 billion from the sale of state pension obligation bonds using the same asset allocation and active managers used for the main pension fund. Managers currently on watch with the $27.3 billion system did not receive POB allocations but will if they are removed from the list, said Jon Bauman, executive director. The $4.3 billion of POB proceeds are managed separately from the system's other assets. Northern Trust, which was hired in June, manages the passive portion of the POB money in four mandates now.
Separately, the system will search for an active domestic bond manager to run $408 million, replacing Morgan Stanley, which was terminated for performance, said Mr. Bauman. Consultant Gordon Dickinson of Callan Associates' Chicago office will conduct the search; a selection is expected at the system's meeting in late October. Bret Gallaway, Morgan Stanley spokesman, declined to comment.