Iowa Public Employees’ Retirement System, Des Moines, hired TCW Group and Prudential Fixed Income as active core-plus fixed-income managers, pending successful contract negotiations, said Karl Koch, chief investment officer, in an e-mail.
Final allocation sizes have not been determined.
TCW and Prudential will replace Pacific Investment Management Co., which currently runs $1.2 billion in a similar strategy. Personnel changes at the money manager resulted in the decision to replace PIMCO, which could take place some time in the third quarter. PIMCO was added to IPERS’ watchlist in January 2014 following the departure of Mohamed El-Erian, CEO and co-chief investment officer. The September departure of William H. Gross, co-founder and CIO, added to IPERS’ concerns about the firm’s stability and its potential impact on PIMCO’s process and performance, according to documents from the pension fund.
In October, an RFP was issued for potential replacements for PIMCO.
Additionally, the pension fund added Northern Trust Asset Management to its pool of potential passive collective investment fund providers, subject to successful contract negotiations. Blackrock, Mellon Capital Management and State Street Global Advisors are currently in the pool.
Separately, the pension fund terminated First Quadrant from a $40 million global tactical asset allocation portable alpha strategy and Ashmore Investment Management from a $46 million emerging markets equity strategy because of underperformance. Ashmore had been on watch since December and First Quadrant since September. A spokesman for First Quadrant could not be reached for comment by press time. A spokeswoman for Ashmore declined comment.
No searches for replacement managers will be conducted at this time. Funds will be reallocated to passive strategies. The managers and allocation sizes have not been determined.
Also, Wellington Management, which runs $51 million in emerging markets equity, was placed on watch at last week’s board meeting because of underperformance. A spokeswoman for Wellington declined to comment.