Peter Nadosy was named interim CIO of Harvard Management on Sept. 30. He will serve until a replacement for Jack Meyer is "in place," James F. Rothenberg, chairman of Harvard Management's board, said in a press release. Mr. Nadosy is a member of the Harvard Management board and a former president of Morgan Stanley Asset Management. Mr. Meyer departed with a team of fixed-income managers to set up a new money management firm, Convexity Capital Management.
Barrow, Hanley, Mewhinney & Strauss "will assume leadership" of Pacific Financial Research, according to an announcement Sept. 30 by Old Mutual Asset Management, parent of both firms.
The move follows decisions by James H. Gipson, Michael C. Sandler and Bruce G. Veaco to leave PFR at year end. They are the senior members of a six-person portfolio management team overseeing more than $17 billion in mutual fund and institutional assets. Mr. Gipson is president, CEO and a principal. Consultants say the trio had declined to sign a new contract with Old Mutual when their old contracts expired in 2004. Neither Mr. Sandler, a vice president and principal, nor James Barrow, principal of Barrow Hanley, returned calls seeking comment.
Michael Rosen, a principal with pension consultant Angeles Investment Advisors, said the loss of three heavyweights obviously calls for an "official review" on behalf of Angeles clients for which PFR manages money, Mr. Rosen said.
One consultant, who declined to be identified, said a review isn't needed: "We're out," he said.
Skirton out at BGI
Blake Grossman will become sole CEO of Barclays Global Investors, part of a wave of management changes at Barclays PLC.
Andrew Skirton, co-CEO of BGI, will leave.
The $13.5 billion Kentucky Teachers' Retirement System hired GE Asset Management to run $600 million in large-cap growth stocks, Wellington Management to handle $300 million in midcap growth stocks and Galliard Capital Management to run $900 million in active domestic core fixed income, said Gary Harbin, executive secretary.
Funding came from large-cap core equity and active domestic core bond portfolios managed by INVESCO, whose contracts weren't renewed.
European pension funds have been slow to shift assets to higher-yielding investments such as hedge funds and private equity, even as pressure is building to improve returns, according to Greenwich Associates' 2005 report on the European investment management industry.
In fact, corporate pension funds have been returning to less risky absolute-return strategies overall, with the percentage of assets in government bonds increasing to 29% from 27% for the two years ended Dec. 31.
The change is being done to meet the demands of new accounting standards and increasing liabilities.
Also, the percentage of European institutions planning to begin dipping into hedge funds decreased to 8% in spring 2004 from 23% the year before, and those expected to hire a hedge fund manager fell to 8% from 23% during the same period.
Participant contributions to 401(k) plans have a far greater impact on retirement wealth than mutual fund performance and asset allocation, according to a Putnam Investments study. The study, which compared those three components of defined contribution savings over a 15-year period, found that mutual fund performance had the least impact.
If investors were able to accurately predict which mutual funds would perform in the top quartile and invested in them, the investors' retirement wealth would be 6% higher over the 15-year period than if they selected bottom-quartile funds, according to the study.
Putnam found that changing the allocation from a conservative to a more aggressive portfolio increased overall asset size by roughly 20%.
However, increasing participant contribution to 4% from 2% of salary had 90 times the impact of changing to top-quartile funds from bottom-quartile, over 15 years.
Hom gets Ohio post
Jennifer C. Hom was named director of investments for the $66 billion Ohio Public Employees Retirement System. Ms. Hom was an investment officer and had been interim director of investments since March, when former director Neil V. Toth died of cancer.
The Oregon Investment Council, which runs the $52 billion Oregon Public Employees Retirement Fund, terminated T. Rowe Price from an $800 million active international growth equity portfolio because of performance and personnel changes, said Kevin Max, spokesman.
The council will likely reallocate the money to existing international growth equity managers, he said.
T. Rowe Price spokesman Steve Norwitz said the firm does not comment on client relationships.
Samuel Israel III, founder of embattled hedge fund firm Bayou Capital Management, and Daniel E. Marino, the firm's CFO, pleaded guilty Sept. 29 to charges of defrauding investors of more than $450 million.
According to a statement from Michael J. Garcia, U.S. attorney for the Southern District of New York, both pleaded guilty to charges of conspiracy, mail fraud and investment adviser fraud.
Mr. Marino also pleaded guilty to charges of mail fraud.
Mr. Garcia's statement noted that Messrs. Israel and Marino face maximum prison sentences of 30 and 50 years, respectively, maximum fines of $250,000 or twice the gross gain or loss resulting from the crime, and forfeiture of Bayou assets. Sentencing is scheduled for Jan. 9.
Each man was released on a $500,000 bond.
Separately, the SEC and the U.S. Commodity Futures Trading Commission filed civil suits on similar fraud and misappropriation allegations in New York district court on Sept. 30.
The defendants agreed to injunctions seeking a freeze on personal and company assets and the appointment of receiver.
Attorneys for Messrs. Israel and Marino did not return calls seeking comment.
The FASB plans to expand and encourage more money managers to participate in an investor task force it set up Sept. 29 to provide "sector-specific insight and expertise from the professional investment community on relevant accounting issues," according to Gerard Carney, spokesman.
Members will appoint industry-specific analysts to advise the FASB board and staff on accounting standard initiatives in the particular sector.