Hawaii Employees' Retirement System, Honolulu, hired Fidelity Institutional Asset Management and Wellington Management to run between $350 million and $400 million each in active global small-cap equities, said Vijoy Chattergy, chief investment officer.
Funding for Fidelity and Wellington will come primarily from existing U.S. small-cap equity and possibly global passive equity, Mr. Chattergy said. He declined to provide specifics as funding sources are still being determined. According to a June 30 holdings report, Jennison Associates and T. Rowe Price managed $492 million and $403 million, respectively, in U.S small-cap equity. BlackRock and Legal and General Investment Management America were hired earlier in the year to manage $1.4 billion in passive global equity. Mr. Chattergy did, however, disclose the funding sources for the $15 billion pension fund's new global equity-oriented options-based managers — Neuberger Berman, Gateway Investments Advisors and UBS Asset Management — and global low-volatility equity managers — Robeco Group and TOBAM. The pension fund previously announced hiring the five managers in the spring to run $2.7 billion total. The pension fund decided not to move forward with Analytic Investors as another options-based manager when the pension fund and firm could not agree on final terms, Mr. Chattergy said. Officials at Analytic Investors declined to comment.
Funding for the five managers will mainly come from the termination of Sands Capital Management from a $400 million domestic large-cap growth equity strategy, C.S. McKee from a $513 million domestic large-cap value equity strategy, J.P. Morgan Asset Management from a $600 million international developed markets equity strategy and Research Affiliates from a $460 million emerging markets equity strategy.
The terminations are related to the ongoing restructuring of the equity portfolio. Last September, the pension fund announced it was reconsidering the level of active vs. passive management in its equity portfolio, and that it intended to move toward more global strategies.
In other news, the pension fund recently committed $220 million to three private equity funds — $100 million to secondaries fund Landmark Equity Partners XVI, managed by Landmark Partners; $70 million to buyout fund Platinum Equity Capital Partners Fund IV; and $50 million to Stone Point Capital's buyout fund Trident Fund VII.
The pension fund has a 13.5% long-term allocation to private equity and a 22.5% target each to stabilized growth and public equity.