Illinois Teachers’ Retirement System, Springfield, approved a search for a real estate consultant, part of regular rebidding of the five-year contract now held by Callan Associates.
At a board meeting Thursday, trustees of the $43.6 billion pension fund accepted the investment committee’s recommendation to issue an RFP, with the date to be determined.
Callan is permitted to rebid. Its contract expires Dec. 31.
Greg Turk, director of investments, told the board that he expects the real estate consultant will be selected at the board’s October or December meeting.
Also approved at Thursday’s meeting were investments or commitments totaling $910 million to eight alternative investment funds.
An aggregate $325 million was earmarked for two hedge funds.
Alphadyne Global Rates Fund, managed by Alphadyne Asset Management, was allocated a total of $200 million, said Kenneth Musick, investment officer, during the investment committee meeting Thursday. An additional $50 million could be invested in the Alphadyne fund with permission of the investment committee chairwoman, Trustee Cynthia O’Neill.
The Varadero International fund, managed by Varadero Capital, will receive a total of $125 million. An additional $75 million could be invested in the Varadero fund, with Ms. O’Neill’s permission, Mr. Musick said.
In real estate, TRS committed up to $400 million in two new funds from existing managers. Up to $300 million was earmarked for Starwood Global Opportunity Fund X, managed by Starwood Capital Group, and up to $100 million was committed to Carlyle Realty Partners VII, managed by The Carlyle Group.
New private equity funds from three existing managers also were awarded commitments totaling $145 million, with JMI Equity Fund VIII receiving up to $50 million, Shasta Ventures IV getting up to $20 million, and Black River Asset Management handed up to $75 million for investment in the Black River Food Fund II.
From the pension fund’s fixed-income portfolio, Vista Credit Opportunity Fund I, managed by existing private equity manager Vista Equity Partners, received a commitment of $40 million.
Other fixed-income changes include the allocation of up to $300 million to existing manager, Garcia Hamilton & Associates, for active cash management. Scottie Bevill, senior investment officer, told trustees that Garcia Hamilton’s active cash management will result in a 38-basis-point performance improvement “from day one,” during the board’s investment committee meeting Thursday.
Garcia Hamilton managed a total of $122 million in international equity and global fixed income for TRS as of March 31 as part of the pension fund’s emerging managers program. Kenyatta Matheny, senior investment officer, said Garcia Hamilton will remain in the emerging managers group because its primary investment strategies are than the typical allocation.
The board accepted Mr. Bevill’s recommendation to split Prudential Financial’s existing core fixed-income allocation: Between 10% and 50% of the portfolio will be invested in Prudential’s fixed-income relative value strategy, with the balance remaining in the core strategy. The initial move into the relative value strategy will be 40%, or about $176 million, of the $439 million Prudential managed as of March 31.
Separately, trustees approved a staff recommendation to place American Century Investments on the pension fund’s watchlist due to personnel changes on its active U.S. small-cap growth equity investment team. Concurrently, American Century’s $300 million allocation was cut in half with the redeemed assets to be split between other U.S. small-cap managers in TRS’ equity portfolio, Mr. Turk told trustees.
Finally, the board agreed to extend State Street Bank’s five-year contract as custodian, which expires June 30, at the recommendation of Deron Bertolo, director of investment operations.
Richard Ingram, TRS’ executive director, told trustees that it would be “less risky” to wait to possibly change custodians until three large internal infrastructure system projects have been completely installed.
Mr. Bertolo said a custodian search could begin in early fall when the administrative projects are up and running.