SPRINGFIELD, Ill. The $41.7 billion Illinois Teachers' Retirement System made its first commodities investments Feb. 21, allocating $200 million each to Gresham Investment Management LLC, Schroder Investment Management North America Inc. and Pacific Investment Management Co. LLC.
Funding will come from reducing allocations to the $1 billion Stocks-Plus portfolio, managed by PIMCO; the $1.1 billion enhanced equity index fund portfolio with Barclays Global Investors; T. Rowe Price & Associates Inc.'s $1.1 billion enhanced equity index fund; and Robeco Boston Partners' $914 million active large-cap value equity strategy. No amounts were given.
Aberdeen Asset Management Inc. also was hired to manage $400 million in emerging markets equity, and Franklin Templeton Investments was hired to manage $400 million in international fixed income. Funding for Aberdeen came from rebalancing the international equity portfolio; managers weren't disclosed. Funding for Franklin Templeton is coming from rebalancing a $1.9 billion active core-plus bond fund managed by PIMCO that is overweighted, said Scottie Bevill, senior fixed-income investment officer, at the board meeting.
New Century Advisors LLC was hired to manage $25 million in global inflation-protected securities as part of the fund's emerging manager program. Funding will come from a $500 million S&P 500 ex-Sudan index fund managed by RhumbLine Advisers.
Illinois Teachers also invested in four private equity funds: $75 million to Advent International GPE VI; $75 million to PAI Europe V; $30 million to Longitude Venture Partners; and $15 million to Kline Hawkes Growth Equity Fund. Funding comes from cash and various index funds.
Also at the Feb. 21 meeting, trustees kept Jarislowsky Fraser Ltd. on its watch list for performance concerns about a $674 million active core international equity account and reduced the allocation by $200 million. The assets will be reassigned to a passive EAFE growth index. Brandes Investment Partners LP also was retained on the watch list because of performance of a $1.3 billion active core international equity fund.
Added to the watch list for performance reasons were Batterymarch Financial Management Inc. for a $247 million active small-cap growth domestic equity account; LSV Asset Management for a $715 million active small- to midcap value domestic equity account; and Mazama Capital Management Inc. for a $228 million active small-cap growth domestic equity account and for $385 million managed in active small- to midcap growth domestic equities. Epoch Investment Partners Inc. was added to the watch list for organizational reasons because the lead portfolio manager, Daniel Geber, left the firm. Epoch manages $98 million in active international small-cap equity for the teachers' fund.
Separately, TRS performance for the year ended Dec. 31 was 10.99%, beating the 8.77% return of its customized benchmark and the 8.29% median return of the public pension fund universe for the same period. TRS is on a June 30 fiscal year and year-to-date Dec. 31 returned 1.73%, compared with 2.03% for the custom index. Otherwise, the fund outperformed the benchmark for all periods.