CalSTRS' investment committee on July 9 approved a 10-year investment plan with a goal of returning 60 basis points each year above the $132.1 billion system's custom benchmark.
In global equities, staff will evaluate structured products such as asset trusts, structured notes, warrants, portable alpha and swaps that generate an index return plus a guaranteed amount of alpha above the custom benchmark. In real estate, the plan increases its emphasis on monitoring and managing risk on both the asset and liability sides of the balance sheet. In private equity, CalSTRS will increase the expertise among its staff for various subsectors.
As part of the 10-year plan, the committee authorized Christopher Ailman, CalSTRS chief investment officer, to examine whether to reduce the number of external money managers the system uses in an effort to save fees, moving some of those operations in-house. In the fiscal year ended June 30, it paid $140 million in fees to consultants and external money managers.
Mr. Ailman also said the system's unfunded liability would be increasing to $44 billion by July 2011, from $22 billion now. He told the committee that while preliminary estimates show that CalSTRS earned 12% in the fiscal year ended June 30, the system's three-year rolling average will still be in the negative.
General Mills contributes
General Mills voluntarily contributed $200 million to its principal U.S. defined benefit pension plans in fiscal year 2009, according to an SEC filing.
The company's combined pension plans were valued at $3.5 billion as of May 30, according to the filing.
Marie Pillai, General Mills vice president and chief investment officer, could not be reached for comment.
Plan, Merrill Lynch settle
The South Miami (Fla.) City Pension Plan will get $115,000 from Merrill Lynch in a settlement after the plan claimed the firm breached its fiduciary duties while it was investment consultant to the $19 million plan, according to Kenneth R. Harrison Sr., attorney for the pension board.
The case was the first to be settled of a number of disputes by Florida public pension plans against Merrill Lynch, Mr. Harrison said.
Bill Halldin, spokesman for Bank of America, parent of Merrill Lynch, declined to comment on the South Miami plan case but confirmed a number of other plans have cases pending against the firm. He declined to comment on them. Terry R. Weiss, an attorney with Greenberg Traurig, which represented Merrill Lynch, declined to comment.
Gatch in at J.P. Morgan to replace Guernsey
George Gatch, president and CEO of J.P. Morgan Funds, was named CEO of J.P. Morgan Investment Management Americas, replacing Eve Guernsey.
Ms. Guernsey plans to retire at the end of the year.
“In this role, George will assume overall responsibility for all of the investment management businesses on the U.S. platform,” according to a June 28 memo from Mary Callahan Erdoes, CEO of J.P. Morgan's asset management business, and Clive Brown, COO of J.P. Morgan Investment Management. “In addition to his current responsibilities for U.S. retail mutual funds and global liquidity, he now also will be responsible for both the U.S. institutional and the (retirement plan services) business that currently report directly to Eve Guernsey.”
Walsh to be New Jersey CIO
Timothy M. Walsh was named director of the New Jersey Division of Investment and chief investment officer overseeing the state's seven defined benefit pension plans with a combined $67.6 billion in assets, confirmed Bill Quinn, spokesman for State Treasurer Andrew Sidamon-Eristoff.
The previous CIO, William G. Clark, left to become senior vice president and CIO at the Federal Reserve System's Office of Employee Benefits on March 1.
Mr. Walsh is CIO of the $8.5 billion Indiana State Teachers' Retirement Fund. Officials there have not yet chosen an interim CIO, nor have they determined a selection process for finding a permanent replacement.
Carlyle sued over losses
Carlyle Group was sued by liquidators of the buyout firm's defunct mortgage bond fund, saying executives lost $945 million in overly risky investments, according to Bloomberg.
Liquidators for Carlyle Capital, a hedge fund that collapsed in March 2008, contend Carlyle directors turned a blind eye to questionable investments in residential mortgage-backed securities and failed to stop the loss of all the company's capital, according to a lawsuit filed July 7 in Delaware Chancery Court.
Lenders seized Carlyle Capital's assets after it failed to meet more than $400 million of margin calls on mortgage-backed collateral that had plunged in value. Carlyle Group, co-founded by David Rubenstein, wound up the fund seven months after its IPO.
Carlyle Group officials said they'd defend themselves in court over the fund liquidators' claims.
Gotbaum gets PBGC appointment
Joshua Gotbaum officially was named PBGC director on July 7 with a recess appointment from President Barack Obama.
Mr. Gotbaum can serve as director, without Senate confirmation, until the end of 2011, when the next congressional session is set to expire. He can take the post as soon as he is sworn into office, under federal law.
Mr. Gotbaum, an operating partner at Blue Wolf Capital Management, could not be reached for comment.
Mr. Gotbaum was originally nominated for the PBGC post by Mr. Obama last November. He was confirmed by the Senate Health, Education, Labor and Pensions Committee and the Senate Finance Committee, but a Senate confirmation vote had been blocked by Sen. Sherrod Brown, D-Ohio, to get the Obama administration to encourage General Motors to enhance its pension commitments to Delphi Corp. retirees.
Latham is new global iShares head
Mike Latham has been named global head of BlackRock's iShares exchange-traded-fund business, a new position, confirmed spokeswoman Bobbie Collins.
Mr. Latham, a managing director, was head of iShares North America, while Rory Tobin, also a managing director, was the head of iShares International. Mr. Tobin has left the company to pursue other business opportunities, Ms. Collins said; she would not elaborate, and efforts to reach Mr. Tobin were unsuccessful.
The global position is part of a restructuring the company announced July 9 to better pursue the global development of BlackRock's industry-leading ETF business, she said.
A replacement for Mr. Latham as head of iShares North America has yet to be named.
Europe's woes sour money managers
Institutional investment managers severely lowered their expectations for global growth for the remainder of 2010, according to a Northern Trust survey.
A quarter of 90 institutional managers surveyed by Northern Trust still expect global growth for the next six months. That's down from 61% in the previous quarter, 76% in the fourth quarter of 2009 and 84% in the third quarter of 2009.
Janet Yang, investment product manager at Northern Trust, said many are concerned over sovereign debt issues in Europe, particularly Portugal, Italy, Ireland, Greece and Spain.