Illinois State Universities Retirement System, Champaign, retained PIMCO for the three portfolios at the $12.7 billion pension fund, said James M. Hacking, executive director of SURS. The board, which reviewed PIMCO because of concerns about market-timing allegations, reduced a core-plus-type bond fund by $250 million, to $1.37 billion, and decided to continue a program - begun in 2002 to diversify its risk from having PIMCO as its largest fixed-income manager - to withdraw $25 million a quarter from the portfolio to finance benefit payments. It also increased a TIPS portfolio by $50 million to $167 million and kept a $565 million structured equity portfolio unchanged.
With the money pulled from the core-plus portfolio, the board increased two core fixed-income portfolios: one, run by Western Asset Management, by $100 million, to $190 million; and another, run by Metropolitan West Asset Management, by $50 million, to $138 million. The other proceeds were used for benefit payments.
The board withdrew the $250 million to "register a concern" with PIMCO about the allegations, Mr. Hacking said, adding PIMCO has performed well in the short and long term. Board members invited William H. Gross, PIMCO chief investment officer, to appear at their June 17-18 meetings to discuss the allegations and other issues.