Illinois State Board of Investment hired Franklin Templeton Investments to manage an active U.S. small-cap growth equity fund option for the $4.1 billion Illinois State Employees’ 457 Deferred Compensation Plan, Springfield, said William R. Atwood, executive director of the Chicago-based board.
ISBI, which oversees the plan’s assets, plans to drop the Columbia Management Investment Advisers Acorn Fund, which accounts for $1.1 billion of the plan’s assets, the most of any fund option, Mr. Atwood said. The Columbia Acorn fund has been an option since the 457 plan’s inception in 1982, he said.
ISBI, which also oversees $15.1 billion in defined benefit assets, made the move for reasons of performance and portfolio characteristics, Mr. Atwood said, noting the Columbia portfolio “migrated away from a conventional small-cap fund.” An active fund, it invests in U.S. small- and midcap growth companies, according to a Columbia year-end 2014 report.
Carlos Melville, Columbia spokesman, declined to comment.
The hiring was the result of an RFP issued in October; Columbia was included in the search, Mr. Atwood said.
Marquette Associates, ISBI’s investment consultant, assisted in the search.
Participants invested in the Columbia fund will be mapped in April into existing T. Rowe Price-managed target-date funds unless they specify the new Franklin Templeton fund or any of the 15 other investment options, Mr. Atwood said.
“We’re trying to get the plan better aligned with best practices because we have an outside allocation to small-cap growth,” Mr. Atwood said. “Defaulting to a lifestyle option is considered best practices as defined by the Department of Labor, Mr. Atwood said.