“The goal of the panel is to establish a more flexible and efficient structure for the equity portfolios by expanding the mandate to include any type of passive mandate or exchange-traded fund within our investment guidelines,” Jonathan Harris, deputy state treasurer, wrote in an e-mailed response to questions.
“This strategy will allow more flexibility to change asset allocation, replace terminated managers and broaden our ability to access a wider array of market exposures,” he wrote. “The managers are not being funded with a targeted allocation; the panel will be utilized as needed.”
State Street Global Advisors has been managing $5.2 billion in passive domestic and international equities and core fixed income, and it will continue to do so, Mr. Harris wrote. “The passive panel will be utilized to bid on future mandates in order to facilitate ongoing asset allocation decisions,” he added.
State Treasurer Denise L. Nappier, principal fiduciary of the $25.5 billion system, announced her decision at the Aug. 10 meeting of the state investment advisory council, which advises the treasurer on investment policies. The hirings are subject to contract negotiations.
Ms. Nappier also approved a $50 million commitment to JFL Equity Investors III, which focuses on investments in “small to lower middle-market defense, aerospace and maritime companies in the U.S. and the U.K. through corporate buyout strategies,” Mr. Harris wrote.
Mr. Harris also said Ms. Nappier is expected to make a decision next month on a consultant to help the system select a master custodian. Representatives of two firms — Callan Associates and Mercer Sentinel — made presentations to the investment advisory council last week.
State Street Bank & Trust has been master custodian since July 2005 and will be invited to rebid.