Illinois State Board of Investment, Chicago, plans to issue an RFP in the next week for an active domestic large-cap value equity manager to run $385 million, said William Atwood, executive director of the $11 billion fund. Previous manager Bear Stearns Asset Management was terminated for performance and compliance issues, he said. Bear Stearns has "consistently lagged (in performance) and we had difficulty getting basic data" on trading and other factors, Mr. Atwood said.
The money is parked in a Russell 1000 value index fund managed by State Street Global Advisors, until a replacement is hired, he said. The RFP will be available from consultant Marquette Associates, which is assisting in the search. The board's investment policy committee could make a recommendation from the RFPs for the board Oct. 20. Mr. Atwood said he didn't have a date for the RFP submission deadline, other than to say interested managers should send their proposals as soon as possible.
Russell Sherman, BSAM spokesman, said: "We are disappointed with their decision. We believe there was insufficient time to adequately judge the fund's long-term performance and we made a concerted effort to answer their questions in a timely manner. We hope that they will reconsider their position at some point in the future." The state board hired Bear Stearns Asset Management in April 2004.
Separately, the board hired CB Richard Ellis and ING Clarion to manage $300 million each in core real estate. Funding will come from real estate investments winding down and from money parked for the real estate allocation in fixed-income index funds, managed by SSgA. Mr. Atwood said it could take at least two years for the real estate managers to draw down the commitments. Real estate consultant Townsend assisted.