San Francisco City & County Employees' Retirement System on Wednesday ratified the termination of the PIMCO Total Return Fund from its $2.67 billion deferred compensation plan.
The retirement system's board approved the termination Wednesday, but Caryn Bortnick, interim deferred compensation manager, said the retirement system's $273 million investment in the PIMCO fund was actually liquidated Nov. 3-4.
Ms. Bortnick said retirement system officials became concerned about the flurry of terminations from the Pacific Investment Management Co. fund by other institutional investors following the sudden departure of William H. Gross, chief investment officer and sole portfolio manager of the fund, and decided immediate action was needed.
The decision was criticized by board member Herb Meiberger, who said liquidity was not a problem in the Total Return Fund and questioned why action had to be taken so quickly, before the full board had a chance to review the situation.
Anna McGibbons, consultant with Angeles Investment Advisors, the retirement system's investment consultant, said her firm recommended immediate liquidation because of concerns over the huge number of other plans terminating PIMCO, including Ford Motor Co., which she estimated had as much as $1 billion in the PIMCO fund. While agreeing with Mr. Meiberger that the fund's bond holdings were liquid, she said the PIMCO fund has continued to underperform, falling 20 basis points below its benchmark in October.
Ms. McGibbons said the money was being moved into the Baird Core Plus Bond Fund. The consulting firm had recommended that move to deferred compensation committee members last month, determining it was the best place to put the money.