Illinois Teachers’ Retirement System, Springfield, today hired Heitman to manage a $1.2 billion core real estate separate account.
Commonwealth Realty Advisors was terminated as part of the system’s move to a more generalist core real estate approach, and the retail developments it manages for the $29.1 billion fund will be transferred to Heitman.
Also, ING Investment Management, which ran $450 million in core-plus fixed income, was terminated for organizational and performance concerns. ING had been on watch since May 2008. Assets eventually will be distributed to other bond managers that are underweight relative to their target allocations. ING spokeswoman Tracey Gordon declined to comment.
Commitments were made to two buyout funds as part of TRS’ ongoing private equity investment program — up to $25 million to MBK Partners Fund II and up to $10 million to MatlinPatterson Preferred Partners Fund II, although investment officer Greg Turk said the actual investment is more likely to be between $2 million and $5 million.
The board also terminated Neuberger Investment Management for a $105 million commodities portfolio and hired the portfolio’s subadviser, Gresham Investment Management, to manage it directly.
JPMorgan Investment Management and BlackRock were added to the system’s approved list of transition managers as the result of a search. SSgA, BGI, Goldman Sachs and Morgan Stanley were reappointed to the list.
Lead consultant Becky Gratsinger, CEO of the system’s investment consultant R.V. Kuhns, told the board she will present the results of a full asset allocation review at the board’s April 7-9 meeting.
Ms. Gratsinger told the board that the TRS fund returned -13.66% in the fourth quarter, compared to -14.79% for the fund’s custom benchmark. For the year ended Dec. 31, fund investments returned -27.11%, vs. the benchmark’s -26.59%. Annualized returns for the TRS fund were -2.35% for three years; 2.86% for five years; and 4.12% for 10 years. Custom benchmark returns for the same periods were -2.9%, 2.12% and 2.89%, respectively.
