Minnesota State Board of Investment, St. Paul, plans to look for a transition manager.
The board’s investment advisory committee agreed with investment staff’s recommendation to “test the market” and put transition management out for competitive bid, Jeff Bailey, director of financial benefits and analysis at Target Corp., Minneapolis, and a member of the board’s investment advisory committee, told the board on Tuesday.
State Street Corp. is the board’s current transition manager and will be considered.
No RFP will be issued, said Mansco Perry III, executive director of the board, which oversees $79.8 billion in pension and other assets. Instead, board staff will create a shortlist of transition managers to be considered and report to the investment advisory committee on Nov. 18.
Separately, the state’s combined funds, comprising $59.4 billion in pension assets returned 18.6% for the 12 months ended June 30, the board’s fiscal year, vs. the board’s 18% custom benchmark, driven by “robust” returns in its 13% alternatives allocation, which returned 18.9%, Mr. Perry said. Details on other asset classes weren’t announced at the meeting.
For the quarter ended June 30, investments returned 3.9% vs. the benchmark’s 4.1% return. For other periods ended June 30, five-year returns were 14.5% vs. the benchmark’s 13.8%; 10 years, 8.4% vs. 8.1%; 20 years, 9% vs. 8.8%; and 30 years, 10.3% vs. 10%. All multiyear returns are annualized.
Also at the board meeting Tuesday, several protesters demanded that the board divest its investment in Israel government bonds because of what they called the country’s violations of human rights and its volatile economy. Mr. Perry would not say how much the board has invested in Israeli bonds; local media reports say the state invests $30 million through the investment board.
Minnesota Gov. Mark Dayton, who chairs the board, said he had a “different view” of Israel and that legal rulings ordering divestment were rejected by state courts, including the Minnesota Supreme Court. “As far as I’m concerned, the case is closed,” Mr. Dayton said.
The board’s holdings in Israeli bonds expire June 30, 2015, but the investment board has an option to reinvest. Mr. Dayton said that decision could be taken up by the board at its March 2015 meeting.