Dallas/Fort Worth International Airport is searching for an international equity manager to fill out an allocation previously run by terminated manager WHV Investments, said Michael Phemister, vice president of treasury management.
The board had roughly $22 million invested with WHV, which was terminated in April because of the retirement of longtime portfolio manager Richard Hirayama on Feb. 28 and concerns over the strategy's heavy energy weighting. In June, the firm announced that it would be shutting down following outflows and performance concerns.
Waddell & Reed was hired to manage $15 million in active international core equity, said Mr. Phemister. The remainder of the allocation will likely go to an international small-cap manager, he added. A hiring decision is expected in December. Interested firms can still contact Mr. Phemister, he said.
Separately, the board hired Pacific Investment Management Co. to run up to $10 million in its Corporate Opportunities Fund II, which will invest in distressed and opportunistic debt of public and private companies.
Funding will come from the termination of PIMCO’s Distressed Senior Credit Opportunities II Fund, which focused on distressed mortgage-backed securities. “Due to a lack of availability of these types of investment, yields have fallen for the fund,” and it is expected that the new corporate opportunities fund will provide a “higher net internal rate of return with limited additional risk,” according to the meeting materials. The opportunities that existed when the strategy was selected in 2012 “no longer really exist” in 2016, and airport board and PIMCO agreed “it was probably time to get out,” Mr. Phemister said. A PIMCO spokesman could not immediately provide a comment. The airport board oversees two pension funds with a combined $540 million in assets, plus two 401(a) plans and two 457 (b) plans with a combined $130 million in assets.
The pension funds have a 17.5% international equity target and 15% non-core fixed income target.