Illinois State Board of Investment, Chicago, hired Wellington Management to run $320 million in active non-U.S. investment-grade sovereign fixed income in developed and emerging markets, said William R. Atwood, ISBI executive director.
It is the $10.4 billion ISBI's first move to a non-U.S. fixed-income manager.
Funding will come from decreasing domestic bond managers, but ISBI's total fixed-income will stay at 20% of its total fund — 17% domestic, 3% non-U.S., Mr. Atwood said.
An RFP was issued in October.
In addition, the board hired State Street Global Advisors to manage $320 million in a Russell Mid-Cap Growth index separate account, Mr. Atwood said.
Funding is expected to come from reducing a $731 million S&P 500 index fund and a $341 million Russell 1000 Value Index Fund, both managed by RhumbLine Advisers.
The board wants to shift more assets away from large-cap equities for diversification, Mr. Atwood said.
The hiring is the result of an RFP, initially issued last July and reissued in September after ISBI received few proposals.
Marquette Associates, the board's investment consultant, assisted in both searches.
Separately, the board terminated real estate consultant Townsend Group. Mr. Atwood said the board has no need for a real estate consultant because it has made its 7.8% real estate portfolio less risky and complicated.
The board has moved to core real estate from opportunistic, and to commingled and separate account funds from limited partnerships, he added.