External managers sought
The $7 billion Arizona Public Safety Personnel Retirement System will search for active managers for its $4.8 billion equity portfolio that had been managed internally, confirmed James Hacking, executive director. A date for the search and the number of firms to be hired havent been determined.
Officials decided to move to external management following a recent asset allocation study conducted by Ennis Knupp. As a first step, the money was moved to Wilshire 5000 and MSCI All Country World ex-U.S. index funds run by BGI.
The system also hired Bank of New York Mellon as a global custodian for the portfolio, replacing Wells Fargo.
SEC enforcers under pressure
SEC investigators are concerned about being undermined by their supervisors, according to a Senate committee report released this month. P&Is sister publication InvestmentNews uncovered the report.
The report follows an aborted insider-trading probe involving Pequot Capital Management and Morgan Stanley chief executive John Mack.
The joint investigation by the Senate judiciary and finance committees was sparked by Gary Aguirre, an SEC investigator-turned-whistle blower. He claimed an insider-trading investigation of Pequot and Mr. Mack was scuttled in 2005 after enforcement officials learned that Mr. Mack was being considered for the top spot at Morgan Stanley.
Mr. Aguirre theorized that Mr. Mack may have tipped his friend, Pequot founder Arthur Samberg, about General Electric Capitals pending acquisition of Heller Financial in 2001. Lawyers hired by Pequot and Morgan Stanley lobbied top SEC officials, the Senate report found. Spokesmen for Pequot and Morgan Stanley declined to comment.
Virginia adds to alternatives
The $56.8 billion Virginia Retirement System invested $377 million in a REIT managed by Morgan Stanley and will invest a total of $75 million over three years in Penwood Select Industrial Partners II, a real estate fund, said spokeswoman Jeanne Chenault. The system also made three private equity commitments: $100 million to Olympus Growth Fund V; $50 million to HarbourVest Partners 2007 Direct Fund; and $30 million to NGP Midstream and Resources. Funding comes from cash.
Detroit Police & Fire hires 2
The $4.3 billion Detroit Police and Fire Retirement System hired Wellington Management and Independence Investment to run a combined $100 million to $120 million in active domestic midcap growth equities, said Walter Stampor, executive secretary. Funding will come from reducing a midcap value equity index fund managed by RhumbLine Advisers to $200 million. Northpoint Advisors assisted.
Fund rejiggers intl stocks
The $16.7 billion San Francisco City & County Employees Retirement System increased its emerging markets and international growth equity allocations at the expense of international value equity, confirmed David Kushner, deputy director for investments. The fundincreased emerging markets to 15% of the $4 billion international equity portfolio from 12% and active international growth to 8% from 6%. The active international large-cap value target was decreased to 25% of the portfolio, from 30%.
The system also added two percentage points to the funds passive domestic large-cap value equity allocation, increasing it to 12% of the $5 billion U.S. equity portfolio. It will cut two points from active domestic large-cap value equity, to 8% of the portfolio.
PERAC ups hedge fund limit
The Massachusetts Public Employee Retirement Administration Commission will allow the public pension systems it oversees to invest up to 10% of their portfolios in hedge funds or absolute-return strategies, up from 7.5%, according to a memo. Allocations in excess of 5% must be invested through the Massachusetts Pension Reserves Investment Trust
LACERS picks Spark II
The $11.1 billion Los Angeles City Employees Retirement System committed $9.75 million to venture capital fund Spark II, according to a board agenda notice. Hamilton Lane assisted.
Employers to fund health
Government Accounting Standards Boards new rule for valuing retiree medical benefits prompted 63% of public-sector employers to consider changing their strategies for funding the liabilities, according to a survey by Aon Consulting. Pre-funding vehicles being considered are VEBAs and Section 115 integral advisory trusts. The new rules require measuring and reporting the accrued value of the liabilities on government financial statements.
Estimates of total OPEB liabilities nationwide range from $600 billion to $1.2 trillion, less than 10% of which are funded, said Phil Peterson, director of the survey and public sector national practice leader.
Idaho fund seeks manager
The $1.1 billion Idaho Endowment Investment Board is conducting an invitation-only search for an active domestic small-cap growth manager to run about $30 million, said Larry Johnson, manager of investments. Funding will come from terminating a U.S. emerging growth equity portfolio run by Nicholas-Applegate. Consultant Callan Associates will assist in the invitation-only search, and the board hopes to make a selection in two months.
Watson Wyatt boosts revenue
Watson Wyatt Worldwides investment consulting group reported $128.7 million in revenue for its fiscal year ended June 30, up 49% from the previous year. Net operating profit surged 211% to $39.3 million for fiscal 2007. In a news release, Watson Wyatt cited strong demand across the board for pension consulting services, but singled out demand for advice on investment strategy and manager selection. For the latest quarter, the groups revenue came to $34.5 million, up 38% from the year before, while net operating profit came to $10.9 million, up 162%.
Carl A. Hess, the groups practice director, Americas, cited significant fixed fee work on behalf of clients for the growth in operating profits.
Pa. Muni hires Denver
The $1.5 billion Pennsylvania Municipal Retirement System hired Denver Investment Advisors to manage $80 million in active domestic small-cap value equities, confirmed James Allen, secretary. Funding came from terminating a small-cap value portfolio managed by BlackRock.