Illinois Teachers’ Retirement System, Springfield, hired MacKay Shields and Manulife Asset Management to run a combined $989 million in active domestic core-plus fixed income, confirmed Dave Urbanek, spokesman for the $37.1 billion system.
MacKay Shields will run $618 million; Manulife, $371 million.
Funding will come from terminating Goldman Sachs Asset Management, which ran $869 million in a similar style, as well as reducing allocations to several other fixed-income managers. The decision to terminate Goldman Sachs was a “strategic decision on the part of investment staff,” Mr. Urbanek said in a telephone interview; he would not elaborate.
The system also committed $100 million to Vista Equity Partners, $45 million to SIRIS Capital Group and $25 million to LiveOak Management Services. SIRIS and LiveOak are part of Illinois Teachers’ system’s emerging manager program. All three are private equity commitments.
In addition, the system committed $50 million of its absolute-return portfolio to hedge fund Carlson Capital.
The system’s board also increased allocations to existing real estate managers Heitman and Lincoln Property. Heitman, which manages $838 million, will receive an additional $200 million; Lincoln Property, which currently runs $417.7 million, will get $150 million.
The system also announced a one-year return of 24% as of June 30. The previous fiscal year’s return was 13.5%. The annualized 30-year return for the system is 9.3%. The current assumed rate of return is 8.5%.