Iowa Public Employees' Retirement System, Des Moines, issued an RFP for two active domestic smidcap equity managers, one in value and one in growth, to each handle $150 million.
The system intends to hire one manager for each strategy but it “reserves the right to select one or more managers for the mandate,” according to the RFP.
The hires will be the $23 billion system's first allocation to active smidcap, according to Judy Akre, director of communications.
While the system has invested in smidcap equity for years through a passive Wilshire 4500 index fund managed by Mellon Capital Management, now at $1.2 billion, “IPERS did not previously invest in active smid due to concerns about manager experience and capacity, illiquidity and higher manager fees,” Ms. Akre wrote in an e-mail. “However, a recent review of the domestic equity asset class led IPERS to conclude that many of these issues have been addressed in today's market and that an allocation to active smid could potentially improve our return on active risk in the domestic equity portfolio.”
Funding could come from cash, from reducing the Mellon Capital-managed Wilshire 4500 index fund, or a combination of both, Ms. Akre said in the e-mail.
The RFP is available at www.ipers.org.
Proposals are due Aug. 19; a decision on hiring is expected in January.
Wilshire Associates, the fund's consultant, is assisting.