The 100 largest U.S. public employee retirement systems had $3.398 trillion in assets as of March 31, a 1.6% increase from three months earlier, said the U.S. Census Bureau's latest quarterly survey of public pension funds.
The increase was due primarily to $80.2 billion in earnings on investments and $34.3 billion in contributions, partially offset by $61.8 billion in benefit payments in the first quarter.
International securities saw a small increase in the first quarter, the first rise in international assets since the first quarter of 2014, up to $624.6 billion as of March 31, up 1.9% from Dec. 31. Despite the increase, it's still significantly below the historical high of $679.1 billion as of March 31, 2014.
Federal government securities, however, declined for the third straight quarter, down to $279.7 billion, a 2.1% drop from Dec. 31. Stocks rose 2.8% to $1.252 trillion from three months earlier, and corporate bonds rose 1.4% to $407.4 billion from three months earlier.
The 100 public pension systems represent 88.4% of all U.S. public pension fund assets.
OneAmerica acquires unit
OneAmerica Financial Partners has agreed to acquire the U.S. defined contribution record-keeping business of BMO Financial Group.
Terms were not disclosed for the deal, which is expected to close during the third quarter. At that time, the combined businesses will operate as OneAmerica Retirement Services LLC.
OneAmerica's record-keeping business has about $30 billion in assets under administration, and the BMO Retirement Services record-keeping business has about $26 billion in assets under administration.
OneAmerica has about 11,000 DC plan clients serving 650,000 participants, Mr. Yoerger said. BMO has about 800 clients serving 730,000 participants.
Because OneAmerica specializes in smaller plans and BMO's business concentrates on midsize to larger plans, the acquisition “allows us to move up a weight class” in providing record-keeping services, Mr. Yoerger said. “We are very familiar with them. It's a great cultural fit.”
Grantham urges prudence
Jeremy Grantham's firm is allocating assets “with great difficulty,” he said while speaking at the 2015 Morningstar Investment Conference in Chicago on June 24.
“The Fed wants everybody to reach. We're reaching, but only a little bit,” said the co-founder and chief investment strategist at Grantham, Mayo, Van Otterloo & Co.
He warned investors to be prudent, but to be “very, very prudent” closer to the U.S. election.
When asked about interest rates, Mr. Grantham said every asset class is yielding 2% less today because of where interest rates are. And if they don't go back up, “pension funds are screwed.”
Oregon plan bill signed
Oregon Gov. Kate Brown signed a bill last week creating a board to set up a retirement savings plan for private-sector workers in the state who are not offered an employer-sponsored retirement plan.
The law creates the Oregon Retirement Savings Fund Board, which will set up a defined contribution plan. Under the law, the plan must be voluntary and easily accessible with portable accounts. Participants will be enrolled automatically with the right to opt out. Businesses will not be exposed to fiduciary liability, and the state will not be liable for investment losses.
Indiana boosts risk parity
Indiana Public Retirement System approved a new asset allocation that would hike the targets in the $30.4 billion retirement system's allocations to ex-inflation-linked fixed income and risk parity, and trim its public equities and real estate targets.
The new target allocations are 24% ex-inflation-linked fixed income, 22% public equity, 12% risk parity, 10% each private equity and absolute return, 8% commodities, and 7% each inflation-linked fixed income and real estate.
INPRS' previous target allocation was 22.5% public equity; 22% ex-inflation-linked fixed income; 10% each inflation-linked fixed income, risk parity, private equity and absolute return; 8% commodities and 7.5% real estate.
The board made the move following an asset-liability study by investment consultant Verus.
The new allocation's increase to ex-inflation-linked fixed income would primarily be in private credit. Also, while inflation-linked bonds are being trimmed, INPRS will increase the duration of that portfolio.
David Cooper, the retirement system's CIO, said the new allocation “syncs with where the board is at on risk tolerance.”
Neuberger Berman buys
Neuberger Berman is buying the management rights to about $1 billion in private equity funds of funds managed by Merrill Lynch Alternative Investments, Bank of America's alternative investment business, said Peter Von Lehe, managing director of Neuberger Berman's private equity business.
The funds of funds have roughly $2 billion in total commitments. Some Merrill Lynch employees will be joining Neuberger Berman as part of with the transaction.
Terms of the deal, which is subject to investor approval, were not disclosed.
The deal marks a continuation of Neuberger Berman's focus on offering alternative investments to DC plans, Mr. Von Lehe said.
Indiana taps 2
The $30.4 billion Indiana Public Retirement System invested $50 million each with absolute-return managers Aeolus Capital Management and Nephila Capital. Both invest in property casualty reinsurance and risk.
Also, the retirement system committed $75 million to GSO Energy Select Opportunities Fund and $15 million to EFM Moda Holdings, a private equity co-investment with EnCap Flatrock Midstream Fund III that invests in liquid storage and distribution.
N.M. sets $300M to alts
New Mexico State Investment Council committed $300 million to three alternative investment funds, said Charles Wollmann, spokesman for the $20.5 billion endowment.
The council committed $150 million to its first international core real estate fund, Invesco Asia Real Estate Fund.
Real estate investment consultant Townsend Group assisted in the hire.
The council also committed $75 million each to Coller International Partners VII and EQT VII. LP Capital Advisors, the council's private equity consultant, assisted on the Coller and EQT commitments.
ESG policies adopted
Ball State University Foundation, has adopted new environmental, social and governance policies, including the creation of an ESG portfolio on a pilot-program basis, said Lisa Renze-Rhodes, university spokeswoman, in an e-mail.
The $236 million foundation's board created the policies following a 15-month review of potentially divesting from fossil-fuel stocks. While divestment was not approved, the board voted to encourage “adoption of (ESG) policies among its advisers and managers,” according to a university news release.
UC risk officer named
Rick Bookstaber was named chief risk officer and managing director, risk management at the University of California's investment office, said an internal memo from CIO Jagdeep Singh Bachher obtained by P&I. The position is new. Mr. Bookstaber will start Aug. 3.
Mr. Bookstaber joins UC from the Office of Financial Research at the U.S. Department of Treasury.
The investment office manages around $90 billion for the university's endowment, pension fund and investment pool.
Insurance AUM dominated
BlackRock and Deutsche Asset & Wealth Management remain atop the rankings of the largest managers of outsourced insurance company assets, said a survey from the Insurance Investment Outsourcing Report.
BlackRock reported $240 billion in global non-affiliated general account assets under management as of Dec. 31, up 15.5% from the previous year.
Deutsche Asset & Wealth Management reported $194.7 billion in AUM as of Dec. 31, down 3.3% from $201.3 billion the previous year.
