Fresno (Calif.) City Retirement Systems rescinded its decision to hire Newton Capital Management to run about $81 million in a global tactical asset allocation strategy, confirmed Stanley McDivitt, retirement administrator.
The retirement systems, which have a combined $2.4 billion in assets between two pension funds, changed course because the agreement would have been with parent company BNY Mellon, not directly with Newton Capital. BNY Mellon is also the pension funds' custodian.
“BNY Mellon would engage Newton in its sole discretion and would direct Newton. I don't believe that Fresno envisioned that relationship and control by BNY Mellon,” wrote Thomas Hickey, general counsel for the pension funds, in an e-mail to Mr. McDivitt and Kathleen Riley, assistant administrator.
Newton also withdrew a separately managed account proposal in favor of a commingled strategy. In the e-mail, Mr. Hickey said a separate account could have resolved any concerns.
The board will review GTAA candidates with investment consultant NEPC in December. Mr. McDivitt did not expect a final decision to be made at that point.
Newton was hired in October along with GMO as the pension funds' first GTAA managers.