Updated on April 2 with correction.
Oklahoma Teachers' Retirement System, Oklahoma City, is searching for its first real estate manager.
The amount of the portfolio has not yet been determined.
James Wilbanks, executive secretary of the $8.6 billion fund, said in an interview that the move is part of an effort to diversify the fund, which is roughly 70% in equities and 30% in fixed income. An asset allocation study is under way with the assistance of consultant gregory.w.group. It is expected to be completed in July.
The real estate manager RFP is available on the system's website at http://www.ok.gov/TRS.
Proposals are due by 3 p.m. CDT April 30 and must be sent to Oklahoma Teachers' Retirement System, 2500 N. Lincoln Blvd., Oklahoma City, OK 73152.
Mr. Wilbanks said the board likely will make a decision by June or July.
Separately, the system terminated PIMCO because of “complexity and opacity” in a $550 million core fixed-income portfolio the firm managed for Oklahoma Teachers, Mr. Wilbanks said.
“It's a highly complex portfolio strategy that uses a lot of derivatives and we were just not comfortable with that,” Mr. Wilbanks said in the interview. “For example, on a swap — we see a swap but don't know which side of the swap we're on.”
The system also has $110 million invested in two PIMCO distressed mortgage partnership funds, which Mr. Wilbanks said have similar opacity and complexity issues. He said the system plans to liquidate those two investments at the end of a five-year commitment; the fund is in the second year of that term.
Mr. Wilbanks said the issues surfaced during a recent audit by the system's internal auditor.
In a fund news release, Mr. Wilbanks said that PIMCO has been a “great” manager for the system, and the move is a “result of our interest in constructing a less complex fixed-income portfolio.”
Mr. Wilbanks said the PIMCO assets will be divided among the fund's five existing fixed-income managers — Loomis Sayles., Lord Abbett and MacKay Shields, all core-plus, and Stephens and Hoisington, both interest rate-sensitive managers. It has not been determined how much each manager will receive.
PIMCO spokesman Mark Porterfield said the firm does not comment on client-related matters.
