The $13 billion Los Angeles Fire & Police Pension System's board terminated AXA Rosenberg Investment Management, which ran $208 million in enhanced index domestic growth equities, Michael A. Perez, general manager, said in an e-mail response to inquiries.
The board gave AXA Rosenberg a 30-day notice of termination after the firm notified the system on April 15 that a coding error had affected its quant strategies for 18 months through November 2009.
AllianceBernstein will run the $208 million in a Russell 1000 Growth index fund.
Separately, the system's board said there were too many obstacles for the city to pursue consolidation with the city's two other plans — the $9.9 billion Los Angeles City Employees' Retirement System and the $7.1 billion Los Angeles Water and Power Employees' Retirement Plan. Board officials said such a move would require changing the state constitution and the city charter.
DOL: 'no problem' with bill
The Department of Labor sees “no problem” with pending Senate legislation that pension industry officials say could eliminate the use of swaps and other derivatives by all defined benefit and defined contribution plans, according an e-mail from a senior Senate Agriculture Committee staffer obtained by Pensions & Investments.
The bill, approved by the Agriculture Committee on April 20 and now before the full Senate, would require swap dealers to take on a fiduciary obligation when offering to enter or entering into a swap with a pension plan. Pension lobbyists say those provisions would essentially block deals with DB plans because the swap dealer would have a conflict of interest, acting as a fiduciary to the plan while also being on the receiving end of the deal.
The bill also could do away with many stable value options in DC plans, because many of the “wraps,” or interest-rate guarantees, issued for stable value products could be considered swaps under the legislation, pension group leaders said.
Neither Phyllis Borzi, assistant secretary of Labor for the Employee Benefits Security Administration, nor Michael L. Davis, EBSA deputy assistant secretary, had returned calls for comment.
Lionstone gets commitment
The $98 billion Texas Teacher Retirement System committed up to $250 million with Lionstone Group to run a domestic real estate portfolio of office, multifamily, retail and industrial properties, confirmed Ann Kifer, Lionstone spokeswoman.
Record returns for universe
The median plan in the BNY Mellon U.S. Master Trust Universe returned a record 31.42% for the one-year period ended March 31, according to a BNY Mellon news release.
The universe returned 3.53% in the first quarter, its fourth straight quarter of positive returns.
“The fact that the median plan was up over 30% for the 12-month period is striking; it's a great number to see if you're an institutional investor,” Greg Stewart, managing director and regional product manager of BNY Mellon Asset Servicing, said in a telephone interview.
Public plans were the top performers for the first quarter, with a median return of 3.76%, followed by corporate plans, 3.66%; Taft-Hartley plans, 3.64%; foundations, 3.4%; endowments, 3.27%; and health-care plans, 3.03%.
Funded status falls $33 billion in April
The combined funded status of the 100 largest U.S. corporate defined benefit plans studied by Milliman decreased $33 billion in April, with liability increases of $39 billion outpacing asset increases of $6 million.
The overall pension funding deficit of the 100 plans increased 15% to $239 billion as of April 30.
“April saw a return to the liability-driven dynamics that characterized much of 2009,” John Ehrhardt, principal, said in a news release. “We saw positive asset movement in April but a significant increase in the pension benefit obligation that dwarfed the month's investment gains. This explains how, despite an 18% cumulative asset return, we've still seen pension funded status decrease by $14 billion during the last 12 months.”
He couldn't be reached for further comment
Senator may delay PBGC chief nomination OK
Joshua Gotbaum's confirmation as director of the PBGC could be held up by Sen. Sherrod Brown, D-Ohio, who wants to urge the Obama administration to encourage General Motors to meet pension obligations to Delphi Corp. retirees.
Mr. Brown and Rep. Tim Ryan, D-Ohio, “requested that the federal government, as a 60% shareholder in the new General Motors, bring GM to the negotiating table to work out a fair solution for the Delphi retirees,” according to a statement from Mr. Brown.
Mr. Gotbaum's nomination is pending approval from Senate Finance Committee; his nomination was approved May 5 by the Senate Health, Education, Labor and Pensions Committee by voice vote, said Bergen Kenny, committee spokeswoman. Mr. Brown is on the Senate HELP committee, but he could hold up a vote on Mr. Gotbaum's nomination if it reaches the full Senate.
Scott H. Mulhauser, spokesman for the finance committee, couldn't be reached for comment.
“The White House continues to work with senators as Mr. Gotbaum's confirmation moves forward,” Shin Inouye, administration spokesman, said in a statement. “He has the full confidence of the president to serve as the director of the (PBGC).”
Mr. Inouye declined to comment on whether administration officials have had any discussions with Mr. Brown. Lauren Kulik, spokeswoman for Mr. Brown, and Julie Gibson, GM spokeswoman; could not be reached for comment.
Ohio 529 taps BlackRock
The Ohio Tuition Trust Authority hired BlackRock as the sole investment manager and administrator of the $3.5 billion adviser-sold portion of its CollegeAdvantage 529 Savings Plan, effective around Oct. 1.
Putnam Investments had been the sole manager until June 2009, when trustees added BlackRock to offer a second investment plan, R. Michael Prescott, the authority's executive director, confirmed in an interview.
The Ohio plan was Putnam's sole college savings program client under an exclusive arrangement, said Laura McNamara, a Putnam spokeswoman. The firm's contract expires Sept. 30, Mr. Prescott said. He didn't say anything negative about Putnam or explain further.
He said the hiring does not affect the Ohio 529 plan's $2.5 billion direct-sold investment program, which offers investment options managed by Vanguard Group, PIMCO, Fifth Third Bank, OppenheimerFunds and GE Asset Management.
People on the move
James Walsh, departing chief investment officer of the $4 billion Cornell University endowment, plans to start a hedge fund. Cornell is searching for Mr. Walsh's replacement while its three senior investment officers — A.J. Edwards, David McNiff and John Regan — lead the endowment on an interim basis.
In another change, Nathan Voris, senior manager, global benefits design at Wal-Mart Stores, is joining Ibbotson Associates as a consultant. Wal-Mart had $11.3 billion in defined contribution assets as of Sept. 30.
County boosts global targets
San Bernardino County (Calif.) Employees' Retirement Association will increase its target allocations to global equities and fixed income at the expense of alternatives as part of a new allocation for the $5.1 billion system.
No searches are planned as the result of the changes,.
The global equity will be raised two percentage points to 22%, global bonds will go up one percentage point to 35%, and alternatives will be cut by three percentage points to 41%, said Don Pierce, investment officer. Cash remains at 2%.
Within the global equity portfolio, the association increased domestic and emerging markets equities targets by one percentage point each to 11% and 4% of total assets, respectively.
