Indiana PERF considers doing away with its hedge fund target allocation

INDIANAPOLIS — The Indiana Public Employees' Retirement Fund might eliminate its target for hedge funds or absolute return strategies, now at 5% of the plan's $520 million alternatives allocation. Strategic Investment Solutions, the fund's alternatives consultant, recommended that the target be dropped while the board learns more about the asset classes before deciding whether to incorporate the investments into the alternatives allocation, said Patrick Lane, communications director. The fund has no hedge fund investments.

Within the alternatives allocation, SIS also recommended that the fund raise debt-related private investments to 15% from 10%, venture capital to 20% from 17.5%, and opportunistic real estate to 10% from 5%; and cut buyouts to 40% from 42.5% and core real estate or REITs to a combined 5% from 10%. SIS also recommended reducing the international private equity target of 10% but didn't recommend a percentage.

The fund's board hasn't set a timetable for reaching a decision or initiating any searches, said Mr. Lane.

HAUPPAGE, N.Y. — Suffolk County Public Employees Deferred Compensation Plan dropped 25 investment options managed by firms linked to the market-timing scandal. The mutual funds were run by AIM Investments, Deutsche Asset, INVESCO Funds Group, Janus Capital, MFS Investment, Putnam Investments and Strong Capital, said Alan Schneider, chairman and county personnel director. Trustees of the $440 million 457 plan dropped fund managers accused of "apparent wrongdoing" in connection with the scandal, Mr. Schneider said.

The plan added a total of 20 funds managed by ABN AMRO, AIG SunAmerica, American AAdvantage, American Century, Calvert Asset, Capital Research, Credit Suisse, Davis Advisors, Dreyfus, Franklin Templeton, Oppenheimer and PIMCO, according to a memo sent to plan participants.

"We're disappointed about their decision but hope to have the opportunity to manage investments for them again in the future," said Sinead Martin, Putnam spokeswoman. Drew Wineland, spokesman for Strong, and John Reilly, MFS spokesman, declined to comment. Paul Lederhos, Janus spokesman, could not comment by press time. Officials for INVESCO, AIM, MFS and Deutsche Asset did not return calls.

TALLAHASSEE, Fla. — The Florida State Board of Administration hired consultant R.V. Kuhns to help the $137 billion system evaluate and search for a global custodian. Current custodian State Street Bank will be among those evaluated. R.V. Kuhns will assess custodians' experience, risks and financial strength; core custody services; investment performance reporting; and securities lending. Callan is a general consultant to the board.

No information was available on a timetable for the custodial evaluation and search.

NEW YORK — Venture capital firms invested $4.6 billion in the first quarter, down from $5.2 billion invested in the fourth quarter but up from $4.2 billion in the first quarter of 2003, according to The MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association. Some $1.3 billion, or 27% of investments, went to life sciences companies.

First-time financings dropped, with 158 companies receiving their first round of venture capital in the first quarter, down from 186 in the quarter ended Dec. 31. Roughly one-third of the first-time financings went to software companies.

MILWAUKEE — Robert W. Baird & Co. will buy back the 57% stake in the firm held by Northwestern Mutual Life Insurance, both firms announced. Financial terms were not disclosed. Baird associates currently own the remaining 43%, according to a company statement. Northwestern Mutual will retain the option to acquire up to a 7% stake in Baird in the future. The agreement is expected to close in May. Further details were not available by press time.

PHILADELPHIA — Delaware Investments is getting out of the defined contribution record-keeping business, according to Tom Gariepy, spokesman. "We had taken a look at our business, and our goal is to be in businesses fitting with our core capabilities and that are profitable," Mr. Gariepy said. "The record-keeping business is challenging."

Delaware hired BISYS to provide record keeping and administration services for about 1,700 retirement plans — mostly 401(k) plans — representing approximately $2 billion in assets, for which Delaware had been the bundled provider, Mr. Gariepy said. Delaware plans to make its mutual funds available to retirement plans for investments.

The Chicago Public School Teachers' Pension & Retirement Fund, State Universities Retirement System of Illinois, Champaign, and Illinois Municipal Retirement Fund, Oak Brook, could undertake a search for a general partner to oversee a joint private equity fund that would be managed by minority-owned managers. The three pension funds tentatively agreed to commit up to $25 million each.

Michael J. Nehf, executive director of the $10.2 billion Chicago teachers' fund, said Mercer Investment Consulting would assist in the search. Mr. Nehf said officials of the funds and Mercer plan to meet at least a couple more times to decide details, and it could take several months before a decision is made. Illinois Municipal has $15 billion in assets; Illinois SURS has $12.7 billion.