SPRINGFIELD, Ill. — The Teachers’ Retirement System of the State of Illinois placed or retained nine asset managers on its automatic watchlist at a board meeting on Aug. 7. Trustees of the $38.4 billion fund discussed manager concerns in executive session and details were not made public.
On watch for performance reasons are: Western Asset Management, for a $465 million global inflation-linked real return account; Batterymarch, for a $215 million active domestic small-cap growth equity strategy; Brandes Investment Partners, $1.2 billion, and Jarislowsky Fraser, $417 million, both for active international equity; Dodge & Cox, $533 million, and ING Investment Management, $780 million, for active core-plus fixed income; LSV for $616 million in an active domestic small-cap to midcap value equity account; and Mazama for a $308 million active domestic small-cap to midcap growth equity mandate and for a $173 million active domestic small-cap growth equity account.
American Century Advisors, which manages $115 million in active international small-cap equities, was placed on watch for organizational reasons.
Separately, trustees reduced the active domestic small-cap to midcap growth equity portfolio managed by Tygh Capital Management by $155 million to about $308 million. The move was made to rebalance Tygh’s mandate back to its target 2.5% allocation. The assets will be invested in a new optimized Russell 2500 Growth index account managed by SSgA.
Trustees also approved a tactical plan for the system’s real estate investments for the fiscal year that began July 1. TRS’ real estate assets totaled $4.7 billion or 12% of the overall portfolio as of May 31. Details of the new tactical plan were not made public.
Mike Barletti, real estate investment officer, told trustees in open session at the board meeting that the tactical plan will re-evaluate the fund’s five-year real estate investment strategy, and new investment recommendations will be made at the board’s February 2009 meeting. The tactical plan also adds investment in emerging real estate managers through commingled funds, Mr. Barletti said.
Also at the meeting, trustees increased investments with two 130/30 managers, bringing system’s allocation to the strategy to its 10% target, from 7%.
Analytic Investors was awarded $120 million, bringing its total to $611 million, while JPMorgan Asset Management was awarded $75 million, bringing its total to $560 million.
Staff told system trustees they hope to invest the remaining $45 million in the JPMorgan 130/30 strategy, which is now closed. Funding will come from rebalancing domestic equities.
In alternatives, trustees committed €50 million ($77.3 million) to the Oaktree Capital Management European Principal Opportunities Fund II. The commitment will be funded through the plan’s ongoing private equity program.
The system also reappointed Northern Trust as master trustee, subject to final contract negotiations.
