City of Milwaukee Employes' Retirement System hired BlackRock to manage a $240 million MSCI All-Country World ex-U.S. Growth index fund, said David Silber, CMERS chief investment officer.
Funding came from William Blair & Co. which managed $500 million, or almost 10% of the $4.9 billion system assets, and the largest allocation of any of its managers, Mr. Silber said. CMERS reduced Blair's active growth-bias equity portfolio benchmarked to the same index by half, to about $260 million, to lower exposure to risk of concentration of assets with a single manager and to bring it closer to the system's typical 5% allocation to managers, Mr. Silber said.
The move had nothing to do with William Blair's performance, Mr. Silber said. “We think they are a great manager and we plan to keep them,” he said.
CMERS plans to review the structure of its equity managers, Mr. Silber said. They have a combined 65% allocation in U.S., global and international equities. The review could be done next year.
CMERS didn't do a search for an index manager, Mr. Silber said. CMERS uses BlackRock to manage $200 million in an alpha-tilt enhanced index fund tied to the Russell 1000 and $270 million in passive fixed income tracking a Barclays Capital intermediate aggregate index, Mr. Silber said.
Callan Associates, CMERS' investment consultant, assisted with the changes.
Separately, CMERS rehired Northern Trust as global master custodian, subject to contract negotiations. CMERS, which didn't undertake a custodian search, extended Northern's contract 60 days beyond its expiration Dec. 31 to allow for completion of negotiations, Mr. Silber said.
