Milwaukee City Employes' Retirement System is considering restructuring its U.S. large-cap equity allocation, changes that could involve manager searches and terminations, said Tom Rick, chief investment officer.
The review focuses on a fundamental discussion of how much the $4.3 billion system wants to tilt its $920 million large-cap allocation to passive vs. active investment management, Mr. Rick said.
Northern Trust Global Investments now manages $344 million in a Standard & Poor's 500 index fund; BlackRock, $172 million in an alpha tilt, enhanced Russell 1000 index fund; and Turner Investment Partners in active growth and AllianceBernstein in active value, each managing $202 million.
“We have to have risk on the table” in managing the fund's allocation, Mr. Rick said. “The question is, ‘Where do we want to place that risk? In the large-cap space or the small-cap space,'” or elsewhere. “We know the large-cap space is the most efficient area of the market. So do we want to put our risk there?”
“If we want to stay active,” the system is also examining how it would do so and the ways to access it, Mr. Rick said.
Investment consultant Callan Associates is assisting in the review.
The fund's board plans to discuss the potential restructuring Sept. 14.