Chicago Metropolitan Water Reclamation District Retirement Fund hired Standish Mellon Asset Management to run $75 million in active global fixed income and State Street Global Advisors to manage about $150 million in passive domestic equity, said Susan Boutin, executive director.
The $1.3 billion pension fund announced in November that it was looking to add active fixed-income managers to its roster in preparation for rising interest rates. An RFP was issued the same month. The other finalists were Wellington Management, AllianceBernstein and Franklin Templeton Investments.
Funding will come from reducing SSgA’s $188 million passive fixed-income portfolio.
Regarding SSgA’s new equity allocation, the firm will manage $98 million in an S&P 500 index fund and $52 million in an S&P 400 index fund.
Funding for the large-cap portion will come from active large-cap growth manager PNC Capital Advisors and active large-cap core managers AllianceBernstein and UBS Global Asset Management, which were terminated as result of the pension fund’s strategy shift, Ms. Boutin said. UBS will continue to manage a small-cap growth portfolio for the pension fund.
Funding for SSgA’s midcap allocation will come from active midcap value manager Systematic Financial and active midcap core and growth manager Wellington Management, which also were terminated because of the strategy shift.
An RFP for passive domestic managers was issued in February. The other finalists were Northern Trust Asset Management, RhumbLine Advisers and BlackRock.
Marquette Associates, the pension fund’s investment consultant, assisted with the changes.
