Illinois State Universities Retirement System, Champaign, authorized an RFP for emerging market debt managers to run a total of $500 million, according to Daniel L. Allen, chief investment officer.
The allocation, amounting to 3% of the $16.6 billion defined benefit fund, is its first to the asset class.
SURS, which oversees a total of $18 billion, could issue the RFP in June, Mr. Allen said. NEPC, the system's investment consultant, will assist. Staff and NEPC plan to present recommendations of emerging markets debt managers to trustees at meetings on Dec. 11-12, when the board could make a decision on hiring, Mr. Allen said in an e-mail.
“At this time, we do not have an opinion on the number of managers to be selected” for hiring from the search, Mr. Allen said. “The search process should be helpful in constructing a plan to identify a recommended number of managers for the board to consider for the emerging market debt portfolio.”
“Subject to the outcome of the search process, I anticipate the 3% allocation to be funded later this year,” Mr. Allen said. “However, a decision is never finalized until the board decides on the manager design and structure of the mandate and contract terms are successfully negotiated.”
SURS has some emerging markets debt exposure through core-plus fixed-income portfolios.
Separately, SURS also terminated Profit Investment Management, which managed $90 million in active U.S. small-cap growth equities, for performance, according to Mr. Allen. SURS placed Profit on watch in June for performance of its portfolio, benchmarked to the Russell 2000 Growth index. NEPC assisted with the change.
Eugene A. Profit, chairman, CEO and chief investment officer of Profit Investment Management, couldn't be reached for comment.
SURS expects to reallocate the money among fixed-income managers in its diversity program of managers of minority-, women-, and disabled person ownership, which together manage 25.3% of SURS's defined benefit assets.
“Specific manager allocations are currently being reviewed and will be reported to the investment committee at the June meeting,” Mr. Allen said.