BlackRock was terminated as part of a fixed-income restructuring SURS has been undertaking for its $12.1 billion defined benefit fund since February and expects to conclude in October, Mr. Allen said
BlackRock ran three fixed-income portfolios — $282 million in an enhanced Barclays Capital Aggregate Index fund, $270 million in core, and $154 million in core plus. BlackRock’s $301 million structured equity portfolio also was dropped.
The assets were given to three managers. SSgA was given $500 million for a Barclays Capital Aggregate Index fund it was hired in June to manage; Chicago Equity Partners was hired to manage $250 million in core fixed income, and Northern Trust Investments added $250 million to its existing Dow Jones U.S. Total Stock Market Index fund, raising it to $1.48 billion.
The system rehired PIMCO to manage $844 million in core-plus fixed income; SURS had announced the rehiring in June but hadn’t then decided whether its funding would change.
Hewitt EnnisKnupp, SURS’ investment consultant, assisted.
The board is restructuring its $2.7 billion primary fixed-income allocation, in part, to deal with the economic environment following the market turbulence of the last two years, Mr. Allen said.
BlackRock continues to manage a total of $1.39 billion for SURS in three non-U.S. equity portfolios and two real estate investment trust portfolios, although the changes ended BlackRock’s reign as the manager with the most SURS’ assets under management. The total SURS assets managed by BlackRock fell to 11% from 20%, slipping it behind PIMCO, which becomes SURS’ largest manager, managing a total to $1.74 billion, or 14%, of SURS’ assets in three portfolios.
Separately, the board retained Marco Consulting Group for domestic proxy-voting advisory services, following an RFP issued in July. Non-U.S. equity managers will continue to vote international proxies.
Also, SURS’ general investment consultant search received proposals as a result of an RFP issued in July from Hewitt EnnisKnupp, Callan Associates, NEPC, Marco, Marquette Associates, Mercer and R.V. Kuhns, Mr. Allen said. SURS staff expects to narrow the proposals to three finalists in October and make a decision Dec. 9.