PHOENIX Arizona State Retirement System plans to make an additional $995 million in private equity commitments in 2008, according to recently released minutes from a Feb. 6 investment committee meeting. Its $1.3 billion private equity program was launched in July. Private equity consultants for the plan are Ennis Knupp, Meketa Investment Group and Franklin Park Associates. CIO Gary Dokes and Director Paul Matson did not return calls seeking further information.
Separately, the $28.3 billion system terminated Franklin Portfolio Advisors and SSgA, which ran a combined $970 million in active domestic large-cap equities, moving the money to an S&P 500 index portfolio, according to the minutes.
Franklin Portfolio, which ran an estimated $595 million in core, was terminated because plan officials had significant concerns regarding Franklin Portfolio's quantitative stock selection model ... (and an anticipation of) continued poor performance relative to their S&P 500 index benchmark, according to the minutes. The plan terminated Franklin Portfolio from a $394 million midcap portfolio in December because of similar concerns. Mike Dunn, a Franklin Portfolio spokesman, said the company does not comment on clients' decisions.
SSgA, which ran $375 million in value, was terminated because there were significant organizational concerns and moderate concerns regarding (SSgA's) ability to add value moving forward, according to the minutes. Litigation risk related to domestic fixed-income performance in the third quarter of 2007 could mean bad publicity for the company, which may lead to general reputational damage and a higher-than-normal risk of personnel departures ... . SSgA also continues to run about $300 million for the plan in passive midcap core equities. SSgA spokeswoman Marie McGehee declined to comment.
The moves bring the passive portion of the system's domestic large-cap equity allocation to 69% of its overall $10.8 billion U.S. large-cap equity portfolio.