LOS ANGELES — Some institutional clients of Capital Group Cos. Inc., Los Angeles, are grappling with a conundrum: At a time when integrity and innovative management have never commanded higher premiums, at what point do you fire one of money management's premier names because of subpar performance?
The $8.3 billion Hawaii Employees' Retirement System, Honolulu, reached its limit Aug. 9, when the board terminated its $250 million emerging markets portfolio managed by Capital International, London. The portfolio's returns had lagged since 2000, and Hawaii's board finally concluded, "It was time to move on," said Kimo Blaisdell, Hawaii's chief investment officer.
In May, the $8.1 billion Ohio Police and Fire Pension Fund, Columbus, terminated a $364 million international equity portfolio with Capital Guardian Trust Co., two months after taking back a $158 million emerging markets mandate from Capital International.
And the $45 billion Pennsylvania Public School Employees' Retirement System, Harrisburg, also terminated Capital Guardian earlier this year as manager of a $900 million international equity portfolio.
Capital International and Cap Guardian are the two Capital Group units that serve institutional clients; they use many of the same portfolio managers and analysts.