Funding will come from reducing a $1.15 billion account run in a similar style by Western Asset Management. Western Asset’s allocation is being reduced because it manages the most assets among IMRF’s core-plus fixed-income managers — BlackRock, LM Capital Management, Progress Investment Management and Taplin, Canida & Habacht, said Dhvani Shah, the pension fund’s chief investment officer, in a report to the IMRF board.
Brandes manages $498 million for Illinois Municipal in active international large-cap value equities. The new allocation is Brandes’ first from IMRF for fixed income.
Illinois Municipal will pay no fees for the Brandes fixed-income investment in the first five years. Ms. Shah said Brandes is looking to build up its core-plus fixed-income business, which had a total of $300 million in AUM before the IMRF hiring, and wants to build a track record in the strategy, so the firm asked IMRF to fund the portfolio.
Also on Friday, the pension fund’s board approved a $25 million commitment to the LaSalle Income & Growth Fund VII, an opportunistic non-core real estate fund managed by LaSalle Investment Management.
IMRF committed $20 million to LaSalle Income & Growth Fund VI in 2012.
The pension fund will get a 35-basis-point fee discount, to 1%, by jointly committing to the LaSalle fund with the $7.3 billion Arkansas Public Employees Retirement System, Little Rock, which has committed $50 million. The combined $75 million qualifies both for the fee discount arranged through both pension funds’ investment consultant, Callan Associates.
The IMRF board also approved setting minimum levels of investments for emerging managers starting Jan. 1, to comply with Illinois Pension Code guidelines that require state pension funds to place at least 20% of assets with minority-, women- and disabled-owned money managers.
Illinois Municipal will have at least 13% of its total assets with minority-owned managers, 6% with women-owned firms, and 1% with managers owned by those with disabilities. Those percentages had been the top limit of ranges for each category of emerging manager.