SPRINGFIELD, Ill. — Trustees of the Teachers' Retirement System of the State of Illinois voted Jan. 17 to move a total of $560 million of indexed assets from Northern Trust Global Investments to comply with a new Illinois law, effective Jan. 27, that bans the state's public pension plans from investing in companies with links to Sudan, said Stan Rupnik, chief investment officer. The board of the $36 billion plan decided it would be more efficient to move the assets to its primary index manager — State Street Global Advisors, which manages $3.143 billion in indexed assets for the system — and trustees and staff were more comfortable with the separately managed accounts SSgA created for the system, rather than the commingled funds Northern Trust offers to public plans that require Sudan screening.
The decision doesn't affect Northern Trust's position as the plan's custodian.
The plan will move about $258 million from NTGI's S&P 500 index fund into a $2.1 billion account managed by SSgA; $168 million from an NTGI Wilshire 4500 fund into SSgA's $406 million Russell Small-Cap Completeness account; and $122 million from an NTGI Lehman Aggregate indexed fund into SSgA's $538 million Lehman Aggregate account. The board also decided to eliminate its allocation to international indexed equity, Mr. Rupnik said, because the dollar amount is small and investment excluding Sudan is problematic. SSgA managed $99 million and NTGI managed $12 million in Morgan Stanley Capital International Europe Australasia Far East index accounts; that money will be redistributed into the other SSgA index accounts.
"While we are disappointed in this decision, TRS remains a highly valued client of Northern Trust and we look forward to continuing our service to them," said Richard Jurek, a spokesman.