Schroder "has had a rocky performance in the last several years as the firm has attempted to improve the communication between its research group and its New York-based portfolio management team," Ms. Hewsenian explained. Senior management changes in both London and New York have been made.
Since inception of the $510 million portfolio on June 1, 1989, however, annualized performance has been 3.15%, outpacing the benchmark return of 2.37%.
On the domestic equity front, Wilshire's Ms. Hewsenian termed the recent departure of Quinn Stills, the lead portfolio manager for CalPERS' $629 million value equity portfolio at The Boston Co. Asset Management LLC, Boston, "a significant loss." The Boston Co. was placed on CalPERS' watchlist in December 2002 because of underperformance, though it rebounded in the first quarter of 2003. A recommendation will be made by atthe December meeting.
Shrewsbury, N.J.-based Osprey Partners, also on the watchlist for performance, appears to be getting past some internal personnel issues, and performance has picked up. The firm runs $579 million in an active domestic equity value strategy for CalPERS.
"It is typical of the type of firm Wilshire favors: it has investment focus in one flagship product and management's interest is aligned with clients as all of the partners' capital is tied up in the firm," Ms. Hewsenian wrote.
The consultant also had kind words for Oppenheimer Capital, New York, which has run a $658 million active domestic equity value portfolio for CalPERS since March 31, 1990.
"Oppenheimer had done an excellent job of restructuring its investment process, staff and culture in managing a ‘generational change' during its acquisition by Allianz, the Germany insurance company," she wrote. After some poor stock picks in 2001 that included Enron Corp. and WorldCom Inc., performance has improved.
Ms. Hewsenian also is reviewing Geewax Terker of Chadds Ford, Pa. While on the watchlist for poor performance, Ms. Hewsenian noted that "Wilshire has a great deal of confidence" in the manager.
A growth-stock manager, Geewax Terker suffered during the Internet bubble because it invested only in stocks of companies that had positive earnings, she noted. That quality growth strategy paid off from 2000 to 2002, when the firm outperformed many other growth-stock managers. However, the manager suffered again in the first half of this year when low-quality growth stocks rallied, she added. The firm manages $619 million in assets for CalPERS.