At Deadline: CalSTRs moves forward with infrastructure investment plan

CalSTRS' investment committee approved the first draft of a policy to invest up to $1 billion in infrastructure investments. Staff at the $169.2 billion fund recommended using the $31 billion fixed-income portfolio to fund the new investments. The investment committee will vote on the policy at its July 10-11 meeting with an implementation plan to be presented Sept. 3-5. CalSTRS does not now invest in infrastructure, said spokeswoman Sherry Reser.

Separately, initial approval was given to changing the benchmark used for CalSTRS' private equity portfolio to the Russell 3000 plus 300 basis points, the same used to determine bonuses for the system's private equity investment staff. The portfolio, which has $28.6 billion in commitments, currently uses two benchmarks — the Russell 3000 index plus 500 basis points adjusted for the last three years of cash flow and the State Street Private Equity Fund index. The committee will likely cast a final vote approving the change in July, said Ricardo Duran, a CalSTRS spokesman.

Corporate pension plans will pull $115 billion from equities in 2008, with $65 billion going into physical long-duration bonds and $50 billion into alternatives, according to a new Merrill Lynch report.

Another $65 billion will flow into fixed-income duration extension and interest swap overlay strategies from fixed-income allocations, bringing total LDI inflows to $130 billion, the report's authors forecast.

The authors looked at the 10-K filings of S&P 500 companies with corporate pension plans and extrapolated their findings onto the entire $2.4 trillion corporate plan universe, said John Haugh, Merrill Lynch research analyst.

The report's LDI forecast came from LDI survey and historical data, and data from eVestment Alliance and Pensions & Investments, Mr. Haugh said.

Johan van der Ende was named CIO of PGGM, asset manager of the €86 billion ($133 billion) Pensioenfonds Zorg en Welzijn, effective July 1, spokesman David Uitdenbogaard said. Mr. van der Ende will report to Else Bos, CEO of PGGM.

The position combines Mr. van der Ende's current role as CIO for strategy and structured investments with a separate position of CIO for portfolio management, which was held by Piet Roelandt until last month when he left to pursue travel and other interests. Mr. van der Ende has been acting CIO; PGGM's previous lone CIO, Leo Lueb, resigned in March 2007.

The typical U.S. pension plan's funded status climbed 3.2 percentage points in May, mainly because of declining liabilities, according to BNY Mellon Asset Management. The increase brought the funded level for a typical U.S. pension plan in the black for the first time in 2008.

Since Jan. 1, the typical plan's funded status is up one percentage point. Rising yields on longer-term corporate bonds pushed liabilities lower, while assets rose 0.8% in the month.

“Improving investor confidence helped the stock market, while higher oil prices and the apparent end of Fed easing drove bond yields higher,” Peter Austin, executive director of BNY Mellon Pension Services, said in a news release. “While this is good news for plan sponsors, we expect a continuation of funded status volatility over the course of 2008.”

Man Group agreed to pay $50 million in cash to acquire a 25% stake in Nephila Capital, a specialist manager in insurance-linked securities with $2.4 billion under management, according to a news release from Man.

The transaction is part of Man's expansion of Man Environmental Capital Opportunities, the firm's multistrategy private equity arm established in 2006.

Nephila invests in such instruments as catastrophe bonds, weather derivatives and insurance swaps. Nephila's three managing principals — Frank Majors, Greg Hagood and Barney Schauble — will continue to manage the business.

A bill prohibiting the $28.5 billion South Carolina Retirement System Investment Commission from investing in companies with ties to the government in Sudan became law June 5. The law applies to future investments; the state does not have any current investments in companies linked to Sudan.

Delta PLC Pension Plan agreed to transfer £450 million ($880 million) — two-thirds of the fund's assets — to the Pension Insurance Corp., a pension insurance, administration and asset management firm, in a partial buyout involving assets linked to retired plan participants, according to David Collinson, partner at PIC.

Under the agreement, PIC will take responsibility for investing the assets as well as the pension liabilities associated with the buyout. Delta will oversee management of the remainder of the fund.

Transferred assets will mainly be invested in fixed income and money market securities, Mr. Collinson added.

PricewaterhouseCoopers advised on the transaction.

Assets of U.S. corporate defined benefit and defined contribution plans totaled $5.54 trillion as of March 31, down 5% from the end of 2007, according to the Federal Reserve's quarterly Flow of Funds report issued June 5.

The value of assets invested by those plans in corporate equities was $2.57 trillion as of March 31, down 7% from the previous quarter.

“That's not surprising given the decline in the stock market over that period,” said Craig Copeland, senior research associate at the Employee Benefit Research Institute.

The report also showed that IRA assets totaled $4.75 trillion in 2007, up about 12.5% from the year before.

“It shows there's a tremendous flow of assets from DC plan rollovers to IRAs,” Mr. Copeland said.

Shareholders of Tech Data approved a say-on-pay proposal sponsored by the $245.4 billion California Public Employees' Retirement System at the information technology distributor's annual meeting.

A shareholder advisory vote regarding changes in executive compensation will now be included in future proxies, according to a Tech Data news release. The vote total could not be immediately learned.

The proposal was backed by three proxy advisers — RiskMetrics Group, Glass Lewis and Egan-Jones Proxy Services. CalPERS owns 703,000 shares of Tech Data.

AIG Investments and Larch Lane Advisors will form a joint venture to invest in hedge fund startups, teams leaving hedge funds to start their own firms and established hedge funds looking to restructure, according to an AIG news release.

AIG Investments, which manages more than $10 billion in hedge funds, and Larch Lane, which has seeded 22 hedge funds in the past seven years, will invest $50 million to $200 million per deal across several strategies and locations.

Forward Management, manager of the Forward Funds, will acquire Accessor Capital Management, investment adviser to the Accessor mutual fund family with a total of $3.3 billion in assets, according to officials from both firms. The combined entity will have $5 billion in assets.

J. Anthony Whatley III, president and CEO of Accessor, and J. Alan Reid Jr., Forward Management president, said the deal is expected to close in August, pending shareholder approval, but declined to disclose further terms. Mr. Whatley will become vice chairman and head of the investment policy committee, which will oversee Accessor's investment process.

The Accessor funds include six lifestyle funds and the Strategic Alternatives Fund. Forward Funds offers 16 mutual funds and separately managed accounts including small-cap, midcap intrinsic value, REIT, micro-cap and high-income total return. “The product sets of both firms are complementary,” Mr. Whatley said. Combining the firms will also increase distribution channels for both, Mr. Reid said.

Accessor Funds will retain its brand as part of the Forward Family of Funds, and Accessor will keep its Seattle headquarters. Forward is based in San Francisco.

John Griffiths was named PIMCO's senior vice president and head of U.K. institutional business development, confirmed spokeswoman Anne Fairchild.

He replaced Paul Craven, who left in 2007 to become head of institutional business development for the U.K. and Ireland at Goldman Sachs Asset Management.

Mr. Griffiths will report to Joe McDevitt, managing director and head of PIMCO Europe.

Mr. Griffiths was head of pension fund development at Santander Global Banking & Markets. Santander spokesman Ovidio Cordero could not be reached for comment by press time.