Illinois State Universities Retirement System, Champaign, suspended its search for the $14.4 billion system's first transition managers after trustees expressed concern that the search criteria excluded minority- and women-owned firms, according to a board discussion April 22.
“The decision of selecting transition managers has been deferred to allow for additional study and education regarding the roles and responsibilities expected from the transition manager relationship,” Daniel L. Allen, chief investment officer of the system, said in an e-mail.
The RFP, issued April 4, will remain open and firms may submit proposals through April 29, the original submission deadline, Mr. Allen wrote. SURS planned to evaluate qualified potential candidates in May and June and make selections in September. SURS anticipated hiring up to five transition managers.
The “decision of selecting the transition manager pool will be deferred,” Mr. Allen wrote. “At this time, a new RFP is not being issued. Further discussion and education will first be conducted with the board of trustees.”
Callan Associates, the system's investment consultant, is assisting in the search.
Steven Rogers, SURS trustee, questioned the lack of inclusiveness in the RFP process and suggested reconsidering the qualifying criteria. The requirements “excluded probably every” minority- and women-owned firm, making it impossible for them to meet the criteria to bid, Mr. Rogers said at the meeting.
Mr. Rogers said SURS has a fiduciary duty to seek a broad array of candidates that could fulfill the work.
The system has been using Northern Trust, its global custodian, and its index fund managers for transitions and plans to continue to do so until transition managers are selected.