CHICAGO Illinois State Board of Investment will double its allocation to international equity to 20% of total assets and double its hedge fund allocation to 10%, said William R. Atwood, executive director of the $11.6 billion system.
As part of the boost in international equity, the system hired Vontobel to manage about 500 million in active MSCI ACWI ex-U.S. equity.
The board also doubled to about $250 million each allocations to its five existing hedge fund-of-funds managers: Grosvenor, Ivy, Mesirow, Rock Creek and EnTrust. Before the change, each managed between $120 million and $130 million.
ISBI made the changes to improve diversification and return, Mr. Atwood said. Funding for the changes will come from a combination of terminating Goldman Sachs, which ran $521 million in active domestic midcap growth equity; reducing a $293 million MSCI ACWI ex-U.S. index fund and a $268 million MSCI EAFE index fund, both managed by SSgA; and possibly S&P 500 index funds run by Amalgamated Bank and RhumbLine. Each has about $640 million.
Goldman Sachs was terminated as part of the diversification move. As a result of the changes, the fund's domestic equity allocation will fall to 30% from 45% of total assets. Marquette Associates assisted with the changes.