Illinois State Universities Retirement System, Champaign, hired SSgA and retained PIMCO for fixed income, while the system evaluates proposals from 96 managers in an overall search to manage its restructured $3.2 billion bond portfolio, said Daniel L. Allen, chief investment officer.
No assets have yet been assigned to the two managers. The $12.6 billion system could assign SSgA $400 million to $700 million in a Barclays Capital Aggregate index fund, the system’s first investment in a fixed-income index fund, Mr. Allen said. PIMCO runs $823 million in a core-plus strategy. “We feel PIMCO has done a really good job,” Mr. Allen said of the rehiring.
The two firms were appointed because the system looked first at passive strategies. Other hirings, assignment amounts and any terminations will be discussed at the system’s Sept. 2 investment committee meeting and possibly at a special meeting it could call in October, Mr. Allen said.
Consultant Ennis Knupp, which assisted in the search, will be working with SURS staff over the summer to evaluate the submissions of 119 active strategy proposals of 125 submitted and passive strategy proposals from the 96 managers, Mr. Allen said. The system is no longer accepting proposals, he added.
Among its fixed-income managers, BlackRock runs $212 million in core plus, $261 million in core and $272 million in enhanced index; WAMCO, $394 million in core plus; TCW Asset Management, $343 million in core plus; Progress Investment, $75 million in core; Pugh Capital Management, $48 million in core; Smith Graham, $47 million in core plus; Taplin Canida & Habacht, $32 million in core plus; and Davis Hamilton Jackson, $28 million in core, all as of March 31, according to a SURS report. PIMCO also manages $302 million in TIPS, and the system internally manages another $168 million in TIPS. In addition, the system has $212 million in cash.
The board is restructuring its fixed-income allocation, in part, to deal with the economic environment following the market turbulence of the last two years.