Northern Trust Global Investments will introduce seven index funds in mid-December that screen out Sudan-related holdings, said Don Pollak, senior vice president and investment relationship manager. The funds were created after an Illinois law was enacted in June that bars the state's public pension systems from investing in shares or doing business with companies tied to Sudan. The law says no new Sudan-related investments can be made after Jan. 26; exisiting Sudan-related investments must be divested within 18 months.
Northern Trust managed about $17 billion as of Sept. 30 for 12 public pension funds in Illinois, including the $34.9 billion Illinois Teachers Retirement System, Springfield, and the $1.5 billion Chicago Laborers Annuity & Benefit Fund, according to the Money Market Directory. The money is split evenly between separate accounts and commingled funds, and the commingled fund investors are committed to moving 75% of those assets - about $6.4 billion - to the index funds, said Mr. Pollak. He wouldn't provide details about the investors.
The Illinois Teachers system's board will likely discuss switching to the Sudan-screened index funds at its meeting Wednesday, said Stan Rupnick, director of investments. Northern Trust manages $620 million in commingled funds for the system.
Executives of the Water Reclamation District of Greater Chicago's $1.1 billion pension fund have been talking with Northern Trust about switching to the new funds and will make a decision next month, said Cindy Kueter, executive director. Northern Trust manages $452 million in three commingled accounts for the fund.
Northern Trust is in the process of choosing a research firm to help identify companies doing business in Sudan, Mr. Pollak said. Its Sudan-free index funds will track the S&P 500 index, S&P 500 Growth index, S&P MidCap 400 index, Dow Jones Wilshire 5000 index, Dow Jones Wilshire 4500 index, MSCI EAFE index and Lehman Aggregate Bond index.