Illinois State Board of Investment, Chicago, plans to search for an emerging markets equity index fund manager to run $223 million, said William R. Atwood, executive director of the $11.6 billion fund.
It would be ISBI’s first manager dedicated to emerging markets and will be benchmarked to the MSCI Emerging Markets index.
The board plans to post an RFP on its website, www2.illinois.gov/isbi, in July. It expects to make a decision on hiring in September.
The board increased its emerging markets equity target allocation to 5% of the total fund, from 3%, all currently managed by managers of non-U.S. developed markets equity with discretion to have varying amounts in emerging markets equities, Mr. Atwood said. “We just want to maintain an index exposure to emerging markets,” Mr. Atwood said.
Funding will come from reducing non-U.S. developed markets equity managers’ portfolios, Mr. Atwood said. None will be terminated, he added.
Marquette Associates, the board’s investment consultant which will assist in the search, said in a report to the board, “We do not feel it is prudent to have an active manager, emerging market mandate. … Due to liquidity and cost of emerging market transactions, we recommend a commingled (passive) fund structure be used for this mandate, not a separate account.”