Illinois Teachers' Retirement System, Springfield, hired MFS Investment Management and Levin Capital Strategies to manage $250 million each in active domestic large-cap core equities, according to a news release.
The board of the $31.3 billion system also approved hiring Franklin Advisors to run from $250 million to $275 million in emerging markets debt.
Also an existing S&P 500 index fund managed by RhumbLine Advisors was increased to $2.14 billion from $1.25 billion.
Altogether, new and expanded domestic equity mandates announced come to $1.8 billion, or more than 20% of Illinois Teachers' $8.9 billion domestic equity allocation as of June 30. Spokesman Dave Urbanek said the new allocations “are entirely internal to the domestic equity portfolio,” with money being shifted in line with Illinois Teachers' goal of streamlining its manager lineup. He declined to say which of the system's other domestic equity managers lost mandates or had their allocations trimmed.
In other asset classes, the system also committed $75 million to the PIMCO Bank Recapitalization and Value Opportunities fund, which invests in financial institutions that acquire distressed or failed lenders. It also committed up to $100 million each to the Baring Private Equity Asia fund and the GTCR Fund X, a growth technology fund; and $75 million to Trident V, a midmarket private equity fund managed by Stone Point Capital.
The system's actuarial consultant, Buck Consultants, pegged the system's unfunded liabilities at $39.8 billion, or 52% of all outstanding obligations, as of June 30, according to a news release. The unfunded liability was up $4.8 billion from the year before, while the system's $31.3 billion in assets represented an increase of $2.8 billion, or 10%, over the same period.
The system posted a 13.5% return for the fiscal year ended June 30, outperforming the 10.9% return for the system's custom policy benchmark.
Also, Houlihan Lokey, LP Capital Advisors and PCG Asset Management were hired to advise the system's staff on its new private equity co-investment program. According to the news release, “using multiple firms as advisers will provide greater flexibility to match investment opportunities with the skill set of each firm.”
The board also said it would formally request $2.406 billion in contributions from the state General Assembly for the year ended June 30, 2012. The contribution, based on an estimate by the system's actuary, Buck Consultants, is added to investment income and the contributions TRS receives from active members, school districts and the federal government to fund short-term obligations and future commitments.
