San Francisco City & County Employees’ Retirement System is expected to issue an RFP at its Dec. 10 meeting for a core-plus fixed-income manager.
The RFP was scheduled to be approved at the pension fund’s Nov. 12 meeting, but it was moved to the December meeting by board President Victor Makras. The size of the portfolio has not been determined.
The search stems from concerns of investment staff and its general investment consultant, Angeles Investment Advisors, regarding the increased concentration of core-plus fixed-income strategies with Aberdeen Asset Management.
Chief Investment Officer William Coaker Jr., in a Nov. 12 memo to the board, said the increased concentration is due to Aberdeen acquiring in 2012 Artio Global Investors, which also manages core-plus fixed-income investments for the $20.2 billion San Francisco pension fund.
The strategies are separate and performance remains above the benchmark for both, but SFERS officials are concerned with “asset concentration risk” given the combined $1.3 billion investment, Mr. Coaker said.
That total is more than half of the retirement system’s total core-plus allocation, which Angeles said in a separate memo totaled $2.3 billion.
Mr. Coaker and Angeles officials also expressed concern in the memos that Christopher Gagnier, head of the North American fixed-income team for Aberdeen, has announced he will retire at the end of 2014. That organizational change placed Aberdeen on the pension fund’s watchlist.
A copy of the proposed RFP shows that firms must have a minimum of $5 billion in U.S fixed-income assets and their core-plus strategy must have exceeded the Barclays Capital U.S. Aggregate Bond index by 1 percentage point for the trailing, three- five- and seven-year periods, annualized, gross of fees.
