ING Real Estate Select is seeking to raise up to 3 billion ($4.7 billion) for its first global fund of funds, a spokeswoman confirmed.
ING just began marketing the open-end, core balanced fund, the Global Osiris Property Fund, and seeks institutional investors with a minimum commitment of 7.5 million.
The £3.8 billion London Pensions Fund Authority invested its entire £150 million ($297 million) property allocation as seed capital in the fund of funds. ING had managed the allocation as a separate account, but officials at the scheme decided the fund of funds would provide greater diversification, lower risk and taxation benefits, said Philip Jones, LPFA investment manager. LPFAs property allocation had been exclusively U.K.
New Turner fund group
Turner Investment Partners created a family of four equity mutual funds to be marketed to institutional investors in Europe and the Middle East, according to a news release.
The Turner Global Growth Equity fund will be the firms first to focus on global growth stocks. Also in the fund family are the Turner Core Growth, Midcap Core and Quantitative Broad Market funds, all clones of Turner domestic funds with similar names.
Robert E. Turner, chairman and CIO, will manage the Global Growth and Core Growth funds, while Steven L. Gold, senior portfolio manager/security analyst, will manage the Midcap Core fund and David Kovacs, CIO of quantitative strategies, will handle the Broad Market fund.
Virtus is new brand name
Phoenix Investment Partners will be renamed Virtus Investment Partners when it completes its previously announced spinoff from The Phoenix Co. Inc., confirmed Joe Fazzino, spokesman.
The company will rebrand its Phoenix Funds family of mutual funds as Virtus Mutual Funds.
Carlyle, Blue Wave drop JV
Carlyle Group on Aug. 1 announced that the assets of its hedge fund joint venture Carlyle-Blue Wave Partners Management will be liquidated over the next few months. This is an orderly liquidation to ensure fair and equitable treatment of all investors, said Chris Ullman, a Carlyle Group spokesman.
The multistrategy hedge funds held $900 million at their peak and now manage about $600 million after being hit hard by credit-related turmoil last year, said a source with knowledge of the situation who asked for anonymity.
In a news release, Carlyle officials noted that the funds launched in a challenging market (2007) and have not been able to achieve the critical mass of assets under management necessary to support a multistrategy fund infrastructure. Investors have been informed that the funds have begun to liquidate their portfolio in an orderly manner.
The Carlyle Group is a minority partner in CBW, and Mr. Ullman stressed that the firms private equity business is unaffected by the closure of the hedge funds, noting that Carlyle has closed on 14 transactions so far this year, valued at $16.2 billion.
La-Z-Boy irks CalPERS
CalPERS is sponsoring a binding shareholder resolution that would give shareholders the right to annually elect directors of La-Z-Boy Inc. The proposal is on the ballot for the Monroe, Mich., companys Aug. 20 shareholders meeting and requires a two-thirds vote of outstanding shares to pass.
In a letter to shareowners seeking support for the resolution, Eric Baggesen, senior investment officer for global equity at CalPERS, said the fund is very concerned with the companys accountability to its shareowners and its commitment to good corporate governance. The California Public Employees Retirement System, Sacramento, has $230.2 billion in assets.
Mr. Baggesen cited a 2004 study by Lucian Bebchuk, a Harvard University professor, which said companies with staggered boards, poison pills, supermajority voting requirements and golden parachutes deliver less shareholder value than those companies that do not have those measures. Mr. Baggesen wrote that La-Z-Boy currently has a staggered board, supermajority voting requirements and a golden parachute.
In March, CalPERS placed La-Z-Boy on its list of underperforming companies, citing poor returns. The companys stock chalked up a -47.8% cumulative return for the 10 years ended June 30, Mr. Baggesen said. CalPERS owns approximately 262,000 La-Z-Boy shares.
La-Z-Boy spokeswoman Kathy Liebmann did not return a call seeking comment by press time.
CME-Nymex merger gets nod
Proxy advisory service Glass Lewis July 30 supported the proposed merger of CME Group Inc. and Nymex Holdings Inc.
The transaction is expected to be accretive to earnings for the surviving shareholders of CME Group, according to a Glass Lewis report backing the merger.
Shareholders of the Chicago-based global derivatives group and Nymex, the parent of the energy-trading New York Mercantile Exchange, are set to vote on the merger Aug. 18. The planned cash-and-stock acquisition, worth $11.2 billion when the deal was announced in January, now stands at about $8 billion a $200 million premium over Nymexs current market capitalization. CME stock has lost 47% of its value this year and Nymex stock has fallen 39%.
Treasury options for dealers
The Federal Reserve on July 30 said it will allow primary dealers to bid on options that would enable them to borrow up to $50 billion in Treasuries from the central bank.
Because of continued fragile circumstances in financial markets, the central bank said in a statement, the New York Fed will auction options for primary dealers to borrow Treasury securities from the Term Securities Lending Facility in advance of periods that are typically characterized by elevated stress in financial markets, such as quarter ends.
The Fed will issue options worth up to $50 billion of borrowing from the TSLF at any time, on top of the $200 billion of Treasury securities already offered at regular TSLF auctions. Details and timing of the launch are still being discussed with dealers.
The Fed is also extending through January the TSLF and the Primary Dealer Credit Facility, which were set to expire in September. Meanwhile, the Fed increased its dollar swap line with the European Central Bank to $55 billion from $50 billion, because of a technicality in the ECBs auction calendar that resulted in greater dollar demand. The swap lines help the Fed meet a foreign central banks needs for dollars.
Merrill sells dark pool stake
Merrill Lynch sold its 50% stake in the BLOCKalert block-trading system to agency broker Investment Technology Group, which created the system with Merrill Lynch in 2006.
Terms were not disclosed, ITG spokeswoman Alicia Curran said.
BLOCKalert, a dark pool geared toward institutional investors, had captured a relative modest volume, averaging 10.4 million shares a day in the first half of 2008. The average size of trades was 41,000 shares, according to ITG.
The block-trading system will be renamed POSIT Alert and added to ITGs POSIT dark pool system.
Monster settlement for fund
Monster Worldwide Inc., New York, agreed to pay $47.5 million to settle a class-action lawsuit filed by the Middlesex County Retirement System that claimed the company was backdating stock option grants to its executives, according to a statement by Labaton Sucharow, a law firm representing the $733 million pension fund.
Monster Worldwide confirmed the proposed settlement, noting the company expects its cost to be about $25 million, net of insurance and a personal payment toward the settlement of $550,000 from Andrew McKelvey, Monsters founder and former CEO.
The Middlesex County system, Billerica, Mass., lost about $15,000 on an investment of about $100,000 in Monster stock, Chris Keller, Labaton Sucharow partner, said in an interview.
The suit, filed in 2007, alleged Monster and Mr. McKelvey and other current or former company executives failed to abide by Monsters stock-option granting practices and to properly account for the undisclosed compensation, rendering the companys financial statements misleading, according to a statement from Middlesex.
The proposed settlement, reached Thursday, is subject to the approval of U.S District Court Judge Jed S. Rakoff in New York, who could finalize the settlement in the fall, Mr. Keller said.
Reversal of fortune in Russell 3000
Financial services and energy sector returns in July belied their year-to-date status in the Russell 3000 index, according to Russell Investments.
The financial services sector gained 6.4% in July, though the year-to-date return was -21.3%. The energy sector lost 18.1% for the month, but was up 2.2% year-to-date July 31.
Value investors also got a boost in July as financial services took the lead. In a complete reversal from the month of June, value stocks at every market capitalization tier outperformed their growth counterparts, reads the release.
In the Russell 1000, 56 financial services firms gained more than 10% for July while 67 stocks in the energy sector lost more than 20%. Bank of America was up 37.8% and Wells Fargo gained 27.5%.
Louisiana Fire sets shortlist for large-cap value
BATON ROUGE, La. Louisiana Firefighters Retirement System is conducting an invitation-only search for a potential $50 million domestic large-cap value portfolio, according to recently released minutes of the $1.1 billion systems June 12 board meeting. Funding would come from terminated U.S. large-cap equity manager Freeman Associates Investment Management. Details on the search or the termination could not be immediately learned.
Separately, the systems investment committee received an educational presentation June 11 from officials at Citi Property Investors Capital Partners on their Asia Pacific Fund II. No action was taken at the meeting.
Further information was not available. Steven Stockstill, the funds executive director, referred all questions to representatives at the funds consultant, Consulting Services Group. An official at CSG did not return a phone call by press time.
Denver plan picks consultant finalists
DENVER Denver Employees Retirement Plan named Summit Strategies Group, Wilshire Associates and incumbent Callan Associates as investment consultant finalists, said Steven Hutt, executive director of the $2.1 billion plan. The board is expected to interview the firms and make a selection at a special meeting Aug. 11. Services could include real estate consulting. An RFP was issued in May.
UTIMCO sees flat fiscal year performance
AUSTIN, Texas University of Texas Investment Management Co., which oversees $25.1 billion in assets for the University of Texas System, might report no growth during the current fiscal year, which will end Aug. 31.
We wish we were making a whole lot more money than breaking even, CEO Bruce Zimmerman told the board of directors at a scheduled quarterly meeting July 23. Mr. Zimmerman described UTIMCOs portfolio as defensive.
In May, the two large public funds UTIMCO oversees, the Permanent University Fund and General Endowment Fund, returned 1.5% and 1.44%, respectively. Mr. Zimmerman would only say the systems overall performance was in the -2% range in June.
The permanent fund returned 2.78% for the three months, 0.91% for the six months and 4.64% for the year ended June 30. The general fund gained 2.85%, 1.01% and 4.9%, respectively, for the same time periods.
The UTIMCO board also discussed increasing what Mr. Zimmerman described as private investments, private equity and real estate, to 22.5% next year and 30% long term, from the current 17.5%. However, no decision was made on searches for managers resulting from the increases.
Separately, a five-year study of 10 major university endowments showed that the Permanent University Fund and General Endowment Fund performed in the 61st and 48th percentile, respectively. Other endowments in the study included Harvard, Stanford and Yale universities. Assets in the two UTIMCO funds totaled $24 billion.
2 New York City plans look at hedge funds of funds
NEW YORK New York City Police Department Pension Fund and the New York City Fire Department Pension Fund are not issuing RFPs but instead are working with their general consultants to explore hedge fund-of-funds managers and make recommendations, said Laura Rivera, press officer for New York City Comptroller William C. Thompson Jr., in an e-mail response to phone inquiries about the hedge fund searches. The funds are aiming to complete their review by mid-fall. Neither Joseph Haslip, assistant comptroller for pensions, nor executives of the funds were available for comment. Ms. Rivera said in her e-mail that she could not provide more information. Strategic Investment Solutions is the general consultant of the $25 billion police fund, according to the 2007 annual report available on the funds website. Information about the general consultant of the $7 billion fire department fund was not available.
GASB offers pension calculation method
NORWALK, Conn. GASB on July 22 proposed a method to calculate any amortization adjustment to the annual required contribution to pension and other post-employment benefit plans to avoid overstatement of annual pension cost and to maintain consistency between the actuarial and accounting measurements used for financial reporting.
The proposed technical bulletin issued by the Government Accounting Standards Board, Norwalk, Conn., clarifies GASB statements 27 and 45, specifying situations in which the adjustment is a known, rather than estimated, amount related to the amortization of overpayment or underpayment of contributions.
Many governments are obtaining their first actuarial valuations for OPEB as part of the process of implementing the requirements of Statement 45, which assumed the amounts are unknown and estimated and which became effective generally for 2007, the proposal states.
Since many governments are implementing the OPEB standards essentially with a blank slate, there is a higher likelihood that they will have the actual amounts from the start, Robert H. Attmore, chairman of the GASB, said in a statement about the proposal. We want to accommodate the use of actual numbers when governments have them in place of the estimation procedure in GASB statements 27 and 45. The estimation method now prescribed by the two GASB statements would overstate or understate annual pension or OPEB cost compared to what would be recognized as expense if the actual amount was used to adjust the annual required contribution the proposal states.
GASB has opened a public comment period on the proposal through Sept. 30.
The rule would take effect for financial reporting periods beginning Dec. 16.
Pension funding slips deeper into deficit
NEW YORK The roughly 370 defined benefit plans sponsored by S&P 500 companies have seen aggregate funding status slip to a deficit of roughly $110 billion now from $60 billion in overfunding at the end of 2007, said David Zion, a veteran research analyst with Credit Suisse in New York. That $60 billion surplus represented a sharp recovery from underfunding of $200 billion at the end of 2002.
A Credit Suisse report based that estimate on its S&P 500 Pension Forecast model, building on funding level and asset allocation data found in those companies 10-K annual reports for 2007.
In an interview, Mr. Zion said pension fund data for 2007 showed a clear shift from equities into fixed income and other instruments, including hedge funds and private equity.
The aggregate allocation to equities for S&P 500 DB plans tumbled to 55% by the end of 2007, from 61% at the end of 2006, while fixed-income allocations rose four points to 33% and other allocations climbed two points to 8%; real estate remained at 4%.
The Credit Suisse report found 210 companies increasing their allocations to fixed income and 219 companies decreasing allocations to equities, while 141 companies boosted their allocations to other strategies. The Credit Suisse report predicted continued growth in demand for LDI strategies.
3 to vie for Aurora small-cap growth portfolio
AURORA, Colo. Aurora General Employees Retirement Board named Cadence Capital Management, Eagle Asset Management and Perimeter Capital Management as finalists for a $12 million active domestic small-cap growth equity portfolio, said Thomas Connell, administrator for the $295 million plan. Interviews and a selection are expected on Aug. 21.
Funding comes from terminating Transamerica Investment Management, which ran the portfolio with a similar strategy. Callan Associates is assisting.
Alaska Permanent posts 3.6% loss for year
JUNEAU, Alaska Alaska Permanent Fund Corp. returned -3.6% for the fiscal year ended June 30, according to unaudited figures released by the $35.9 billion fund, confirmed spokeswoman Laura Achee.
According to a news release, equity market volatility in the past nine months and March in particular was to blame. Stock portfolios reflected this volatility, with the funds U.S. equity portfolio returning -11.7%, the non-U.S. equity portfolio returning -5.5% and the global equity portfolio returning -10.2%.
The Permanent Funds bond portfolios were positive performers for the year, helping mitigate some of the losses on the stock side. Bond managers were able to take advantages of weaknesses in the market, with the U.S. bond portfolio returned 6.2% for the fiscal year and the non-U.S. bond portfolio up 10.9%.
Audited figures will be reported at the funds annual meeting on Sept. 24-25.
PBGC takes over hospital plans
WASHINGTON The PBGC announced July 29 that it would take over four underfunded defined benefit pension plans at Auburn (N.Y.) Memorial Hospital, a non-profit medical center.
The agency stepped in after a U.S. Bankruptcy Court found that the hospital would not be able to survive outside of bankruptcy protection unless the plans were terminated. The hospital sought Chapter 11 protection on April 24, 2007, in Syracuse.
The plans together have assets of about $37 million to cover $66.5 million in benefit liabilities, according to Pension Benefit Guaranty Corp. estimates. The agency expects to be responsible for about $28.2 million of the $29.5 million shortfall.
We went into Chapter 11 because we had significant unpaid contributions that had collected over the past four years, said John Baran, Auburn CFO. We just couldnt pay those and keep investing in the hospital.
Separately, the PBGC and Elkem Metals Inc., Oslo, Norway, reached an agreement on funding for the $105 million Elkem Metals Inc. Retirement Program Plan, Moon Township, Pa.
After Elkem sold plants in Oklahoma and West Virginia, the plan lost 80% of its active participants, creating an additional liability of $50.7 million. As part of the agreement, the company will contribute $17.3 million to the plan, will continue to make required annual payments and will pay an additional $22 million to the PBGC if the agency takes over the plan.
The fund is currently more than 80% funded, up from 74% funded at the end of 2006, said David Renfrew, Elkem director of human resources.
Oklahoma Police takes hit in June, first half
OKLAHOMA CITY Oklahoma Police Pension and Retirement System returned -3.66% in June, bringing six-month losses to 4.69% but beating custom benchmark returns of -5.46% and -6.81%, respectively, according to the $1.7 billion systems website.
The systems long/short equity managers outperformed their long-only counterparts. Attalus Capital returned 0.2% in June and -1.59% for the six months ended June 30, and Grosvenor posted monthly and six-month losses of 3.53% and 5.46%, respectively, vs. -8.43% and -11.91% for the S&P 500.
The systems overall equity asset class, which includes private equity, lost 5.57% in June and -7.88% in the first six months, ahead of its custom benchmarks -8.24% and -10.96%, respectively. Real assets lost 1.11% in June, lowering cumulative gains this year to 4.07%.
Fixed-income managers were about even in June and returned 0.67% return year-to-date June 30, vs. the Lehman Brothers U.S. Universal Bond indexs -0.29% and 0.84% returns for the periods.
SEC, Labor to share investigative info
WASHINGTON The SEC and Department of Labor announced they will share investigative information about investment advisers and other firms of mutual interest to the agencies.
A memorandum of understanding said the two agencies will formalize and strengthen cooperation to share information relating to retirement and investments, and provide investors, benefit plan participants and plan administrators with better access to more understandable information that they can use to make informed investment decisions, according to an SEC news release.
Staff members from both agencies will also meet regularly to discuss enforcement cases, examination findings and other matters that the SEC and DOL staffs believe would be of interest to the other regulator in fulfilling their respective regulatory responsibilities, according to the memorandum.
This formalizes some activities that the agencies have been doing together, said Karen Barr, general counsel of the Investment Adviser Association, a Washington-based group representing money managers. It would be a big deal if they used this to conduct joint investigations of investment advisers. That is something we have not seen at this point.
Plan offers credit line to Guggenheim fund
SAN BERNARDINO, Calif. San Bernardino County Employees Retirement Association put up $25 million to help establish a senior unsecured credit line for Guggenheim Structured Real Estate Fund II. The association had committed $25 million to the fund in February 2006.
This will be a source of income for the association, which will be paid, along with other institutional investors, for offering the credit line to the Guggenheim fund, said Timothy B. Barrett, executive director and CIO of the $6.2 billion association.
Class-action lawsuit targets MFS
BOSTON MFS Investment Management was hit with a class-action lawsuit over the firms portrayal of the relative attractiveness of different share classes in its fund prospectuses.
The suit alleges the Boston-based firm knowingly presented Class A shares as the best performing share class for the long term when Class B and/or Class C shares would have been their best investment choice for any holding period.
Citing statements in a number of MFS multiclass fund prospectuses, the suit, filed by Barrack, Rodos and Bacine, a Philadelphia law firm, focuses on investors who purchased less than $50,000 in aggregate of Class A shares in certain MFS funds, and paid a load or commission.
Class A shares have a front-end sales charge but a low expense ratio, and B shares have no front-end fees but higher 12b1 fees, although eventually they convert to A shares after several years. C shares, for investors contemplating a more short-term investment, have no front-end fees but a higher expense ratios and dont convert to A shares.
Daniel Bacine, a lawyer with the firm, wasnt immediately available for further comment.
MFS believes the lawsuit is baseless and completely without merit. We plan to defend ourselves vigorously against it, MFS spokesman John Riley said.
Franklin Resources in an acquiring mood
SAN MATEO, Calif. Franklin Resources officials said theyre looking for attractive money management acquisition opportunities as valuations for financial services providers have declined, CEO Greg Johnson said in an earnings call with analysts July 24.
I think were always looking at opportunities and youre exactly right, the valuations have come down both in the U.S. and outside the U.S. Its a tricky business, said Ken Lewis, CFO at Franklin, in response to an analysts question. Every firm is a snowflake and we might have a specific need, and the properties might meet one need but bring other problems. Were continuing to look at it, so I think if your question is if theres interest in pursuing those opportunities, there is (interest).
Messrs. Johnson and Lewis said they would be very interested in a pure asset purchase, or buying for scale.
I think everythings relative to how much youre willing to pay, and what you can do with it and ultimately add shareholder value, and whether thats going out or buying a different capability and making it grow, or buying existing assets that you can combine with the existing funds, were certainly open to that, Mr. Johnson said. There just hasnt been that opportunity at the right price to make that happen to date, he added.
Neither Mr. Johnson nor Mrs. Lewis indicated any firms for which they are considering making a play.
TA Associates buys Keeley stake
BOSTON TA Associates has taken a minority stake in Keeley Asset Management, confirmed Kevin Keeley, CEO of the $10 billion small-cap to midcap equity money management firm.
Mr. Keeley declined to reveal the amount invested by TA or the size of TAs stake except to say that it did not trigger change in control provisions and that the Keeley family still controls the company. Founder John Keeley will continue as the firms CIO.
Roger B. Kafker, a managing director at TA Associates, will take a seat on Keeleys board.
The TA investment could be used to expand the number of mutual funds Keeley offers.
Court tosses out suit against N.C. treasurer
RALEIGH, N.C. A North Carolina state court judge dismissed for lack of evidence a lawsuit against North Carolina State Treasurer Richard Moore that claimed his office did not release public documents requested by a state labor union.
The State Employees Association of North Carolina filed the suit Feb. 1, saying it began requesting the documents under the states public records law more than a year ago after a March 2007 news article suggested Mr. Moore had used his position as sole trustee of the $82.4 billion North Carolina Retirement Systems, Raleigh, to garner campaign contributions, an allegation Mr. Moore has denied.
Mr. Moore said in a news release that the suit was filed in the middle of a competitive primary race for the Democratic nomination for governor, and claimed the union spent at least $30,000 on a public relations campaign about the lawsuit. Mr. Moore lost the primary to Lt. Gov. Beverly Perdue.
According to SEANCs website, the association offered to drop the suit if Mr. Moore agreed to support legislation that would end his sole trusteeship for the retirement systems and establish a board. In response, Mr. Moore accused the association of bribery and called for dismissal of the suit, according to press accounts at the time.
Heather Franco, spokeswoman for Mr. Moore, declined to comment beyond the statement. The press release stands on its own, she said.
Dana Cope, SEANC executive director, did not return requests for comment by press time.
Nippon Life buys 5% stake in Russell
TACOMA, Wash. Northwestern Mutual Life Insurance Co. on July 23 announced it has sold a 5% stake in Russell Investments to Nippon Life Insurance. Terms were not disclosed.
Northwestern Mutual sees Nippon life as a premier long-term investor, Jean Towell, Northwestern spokeswoman, said in an interview. She said the sale allows Russell an opportunity to expand its overseas presence. Officials at the firms do not expect any management changes at Russell, and Nippon will be a passive investor, she added.
Russell manages $211 billion in total assets. The firm already boasts a strong international presence with some 57% of all assets coming from non-U.S. investors.
A Nippon executive could not be reached for comment.
AMG to add 2 firms to manager stable
BOSTON Affiliated Managers Group on July 23 announced agreements to acquire majority equity stakes in two asset management boutiques, Gannett Welsh & Kotler and Harding Loevner. Terms of the deals were not disclosed.
Boston-based GW&K manages more than $7 billion in municipal bond, core taxable fixed income and multicap/small-cap equity strategies. Somerville, N.J.-based Harding Loevner manages about $6 billion in global, international and emerging markets equity strategies.
Sean M. Healey, AMG president and CEO, said his firm is joining with GW&Ks management team to buy the entire ownership interest from the Bank of New York Mellon. At Harding Loevner, AMG will buy a roughly 60% interest from the independent firms owners.
BNY Mellon spokeswoman Patrice Kozlowski said in an e-mail GW&Ks business model combining private wealth management and institutional asset management didnt fit neatly with BNY Mellons segregated business model.
Harding Loevner CEO David Loevner said in a news release that the new arrangement should help make his firms services available to a wider range of clients, including institutions overseas.
Separately, AMG announced that its asset management boutiques had combined assets under management of $241.8 billion as of June 30, down 0.7% from the prior quarter and down 9.4% from the year before. Net client outflows of $2.1 billion more than offset investment gains of $352 million in the quarter.
The holding companys net income for the latest quarter came to $35.3 million, up 7.6% from the prior quarter but down 16% from the year before. Second-quarter revenues came to $309 million, down 7.8% from the previous quarter and down 6.8% from the year before.
In an earnings conference call, Mr. Healey said AMGs prospects for adding to its stable this year remain excellent, with capital-hungry financial conglomerates mulling sales of asset management arms and the ranks of other potential buyers thinning in a credit-constrained environment.
PIMCO to join ETF party
NEWPORT BEACH, Calif. PIMCO plans to launch its first exchange-traded fund.
The bond shop sought permission from the SEC to start issuing ETFs, Don Suskind, product manager at PIMCO, wrote in an e-mail to Pensions & Investments.
The new ETFs will track third-party fixed-income indexes, said Mr. Suskind. Additionally, we are evaluating a variety of strategies for potential delivery in the ETF vehicle, including actively managed strategies, he added.
Paradigm offers opportunistic all-cap core strategy
ALBANY, N.Y. Paradigm Asset Management is introducing its All Cap Core Opportunistic Strategy, confirmed James Francis, president and CEO. The actively managed equity strategy was first launched in the fourth quarter of 2007, but the firm is now just starting to market it.
During meetings with consultants and clients we realized this strategy is well positioned to meet current investor needs, so we decided to accelerate the rollout of our promotional and marketing materials, Mr. Francis said.
He said four large institutional investors he declined to identify provided seed capital for the fund, which allows unconstrained exposure to a broad range of investment opportunities by removing style and market-cap limitations. He said there has been a realization among pension executives that unconstrained portfolios give managers more flexibility to produce additional alpha.
Mr. Francis, Greg Pai, managing director, and Jeffrey Marcus, senior portfolio manager, are leading the team that oversees the portfolio, which now has less than $50 million in assets.
SEI debuts terror-screened fund
OAKS, Pa. SEI Investments launched the SEI Screened World Equity ex-U.S. fund, primarily aimed at non-profit organizations that want to avoid investing in companies that generate revenue through business relationships in countries, such as Sudan or Iran, that support terrorism, genocide or human rights abuses, according to a news release.
UBS starts fundamental-based equity portfolio
CHICAGO UBS Global Asset Management announced the launch of its new U.S. Fundamental Equity Market Neutral strategy, spokesman Kris Kagel confirmed.
According to Scott Bondurant, head of equity long/short strategies at UBS, underlying stocks are market-, sector- and factor-neutral. The broadly diversified portfolio will use 100 to 150 long positions and 100 to 200 short positions.
The firm also has another long/short strategy, the OConnor Global Fundamental Market Neutral Long/Short scheme, which was created in 2003.
We hope to have as much success in the fundamental market neutral space as our colleagues at OConnor, who operate independently within UBS Global Asset Management, Mr. Bondurant said.
UBS Global had $167 billion in assets under management as of March 31.
1 in 4 dont monitor suspicious transactions
NEW YORK Nearly a quarter of investment management professionals said their firms do not monitor suspicious transactions, according to a new survey by Deloitte Financial Advisory Services. An additional 32.4% of the more than 500 financial services executives polled said they were not aware of whether their firms kept track of such transactions, according to a news release.
A severe lack of viable checks and balances designed to prevent and detect wrongdoing, combined with high pressure to deliver strong investment returns, may make firms within the financial services industry vulnerable to fraudulent behavior, said Simon Charlton, a principal in Deloittes forensic and dispute services practice.
Firms can mitigate risks by tailoring fraudulent detection programs, using software that can uncover unusual transactions, instituting anti-money laundering compliance programs and conducting due diligence to ensure laws are not violated, according to the news release.
The executives were polled April 8.
3 million DB participants in frozen plans
WASHINGTON More than 3 million people are enrolled in frozen single-employer defined benefit plans, according to a new GAO report.
The most common reasons executives gave for freezing their plans included the impact of annual contributions on their firms cash flows and the unpredictability of plan funding, according to the Government Accountability Office.
Among pension plans surveyed, 23% involved a hard freeze, in which all future benefit accruals cease. Additionally, 22% involved a partial freeze.
Also, 83% of the companies with frozen plans offered alternative retirement savings arrangements.
As businesses struggle in this economy to pony up more money than theyve ever had to contribute before because of the (Pension Protection Acts) stiffer funding requirements, I fear that the spike in pension freezes will rise even more, said Rep. Earl Pomeroy, D-N.D., who was among legislators who requested the GAO report, in a news release. Some argue that higher funding would be good for workers, but there is a hitch private-sector pensions are voluntary.
The GAO received responses from 48 DB plan officials of the 471 executives contacted.
GE, Abu Dhabi investment firm join forces
STAMFORD, Conn. General Electric Co. and Mubadala Development Co. announced it will create an $8 billion commercial finance partnership over the next 12 months.
The new business, to be based in Abu Dhabi, will offer origination, funding and risk management services, primarily in the Middle East and Africa, according to a news release from both firms. It will initially leverage GE Capitals existing origination and servicing business, and assets are expected to grow to $40 billion.
Mubadala, owned by the Abu Dhabi government, expects to become one of GEs top 10 institutional investors, buying shares over time in the open market. Also, Mubadala plans to invest $200 million in GE Industrial Investment Partners, which provides capital to health-care, energy and transportation companies, while GE plans to commit up to $50 million in a clean-tech fund run by Masdar, a Mubadala subsidiary.
42% of 401(k)s have auto enrollment
NEW YORK Forty-two percent of 401(k) plans offer automatic enrollment and another 26% are considering it, according to a survey by Deloitte Consulting.
According to the 2008 401(k) Benchmarking Survey, conducted by Deloitte, the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialists, 23% of surveyed plan executives offer a Roth 401(k) feature and 18% are considering adding it.
Additionally, 57% of plans offer target-date funds as investment options and 50% offer them as their default option.
Deloitte surveyed 436 plan executives electronically.
Manager survey: Dont order GIPS verification
PORTLAND, Ore. GIPS compliance verification should not be mandatory, according to a survey of investment advisers by Vincent Performance Services, which provides GIPS consulting and verification services to firms.
But 96% of responding firms claim compliance, according to a 19-page report based on the results.
Sixty-seven percent opposed mandatory verification of compliance with the Global Investment Performance Standards, while 33% favored mandatory verification.
Of the reasons given for opposing mandatory verification, 50% said the cost would be prohibitive, another 50% believe the market will make verification de facto mandatory, 27% said clients dont demand verification, and 8% said the quality of contribution from the verifier does not add value.
Karyn Vincent, founder and principal of Vincent Performance Services, said in an interview she was surprised at the high number of firms claiming compliance.
The GIPS executive committee Nov. 8 rejected requiring verification of money managers compliance by an independent firm. Instead, it adopted a proposal to require that the GIPS compliance statement include an explicit disclosure of whether or not the firm has been verified.
The executive committee will include the disclosure proposal in the GIPS exposure draft, which will incorporate all other proposed changes to GIPS and is expected to be presented for a six-month public discussion in January 2009, Jonathan Boersma, GIPS executive director, said in an interview. Based on the responses to the draft, the executive committee will issue the updated GIPS, effective Jan. 1, 2011, Ms. Vincent said.
Ms. Vincent and Mr. Boersma are members of the GIPS executive committee.
GIPS is a voluntary set of performance presentation standards developed by the CFA Institute for the investment management industry worldwide.
Vincent received responses from 134 of 661 investment advisory firm firms invited to participate in the survey, which was conducted between February and April.
Bull market for credit analysts, Greenwich says
GREENWICH, Conn. Hedge funds and other institutional investors actively trading fixed-income instruments say they are hiring more credit analysts in response to losses theyve faced over the past year on investments in exotic corners of the market, according to a survey by Greenwich Associates.
Almost 30% of institutions participating in Greenwichs 2008 fixed-income survey said theyre looking to expand staffing, with talent available amid sell-side layoffs.
Greenwich also said more than half of respondents said they have changed or plan to change their fixed-income investment strategies in response to the global credit crisis, with more than 60% looking to shift into higher quality securities and 55% tightening their risk-management policies. Roughly one-third of respondents say theyre unwinding underperforming fixed-income positions, with an equal number looking to take advantage of investment opportunities in illiquid securities.
The markets biggest traders are still dumping problem securities, not buying, Greenwich consultant Tim Sangston said in a news release.
Greenwich also reported that hedge funds portion of fixed-income trading volume dropped to just 20% over the past year from 29% the year before, even as their trading volumes in areas such as high-yield credit, leveraged loans and structured products continued to increase in absolute terms. Greenwich reported hedge funds had 95% of U.S. trading volume in distressed debt, 61% in high-yield credit derivatives; 60% in structured credit and 55% in leveraged loans.
Those absolute increases probably reflect the deleveraging of hedge fund fixed-income portfolios that has been unfolding over the past year, Greenwich consultant Peter DAmario said in a separate news release.
The survey is based on 1,246 interviews with institutional investors conducted between February and April.
Bundled service focuses on Taft-Hartley plans
NEW YORK New York Life Retirement Plan Services on July 21 introduced a new bundled platform for Taft-Hartley plans.
Called Taft-Hartley DB Complete, the platform provides union plans with actuarial services, administration, trust, investment management and plan education. Its first Taft-Hartley DB plan provides access to 5,500 funds from 95 mutual fund families, separately managed account capabilities and commingled funds, according to a news release.
NYLRPS has $4.5 billion in Taft-Hartley defined contribution assets under administration.