Ohio Bureau of Workers Compensation, Columbus, terminated all 69 of the money managers that were handling traditional asset classes for the $14.5 billion fund. As reported Thursday on Pensions & Investments' website, www.pionline.com, the fund's oversight committee voted to put all assets, except for about $200 million currently invested in private equity, into fixed income, following the advice of a management review team appointed by Ohio Gov. Robert Taft. In the next three to four months, the fund will issue an RFP for several fixed-income managers to handle the assets, said Emily Hicks, a spokeswoman for the fund. No decision has been made on when the RFP will be issued or when selections will be made, or whether the money will be actively or passively managed.
"Right now, we're basically starting with a clean slate," Ms. Hicks said. "We let everyone go with the understanding that they are all leaving with passing marks."
Until the fixed-income managers are hired, the $14.3 billion will be parked in an equity index fund.
One money manager at one of the firms the bureau terminated, who did not wish to be identified, said the bureau informed its managers that they were terminated via a fax that was transmitted Thursday. "This really comes as a shock to us," he said. "I honestly didn't think they were going to do this. The expectation was that they were going to terminate only the underperforming managers."
The list of terminated managers includes AllianceBernstein Institutional Investment Management, Lazard Asset Management, BlackRock and Ariel Capital Management.
The decision to terminate all of the fund's managers was based on recommendations made by the fund's former consultants, Ennis Knupp and Callan Associates, that the fund could save a significant amount in fees and avoid future funding problems if it immunized its portfolio.
In October, the governor-appointed management review team released a report urging the fund to move at least the majority of its assets into index funds and to hire external trading firms to ensure best execution. Mr. Taft was responding to the fund's $300 million loss on its investments in 2004.
