Marin County Employees' Retirement Association, San Rafael, Calif., put Morgan Stanley Investment Management and Fidelity Institutional Asset Management on watch, said Jeff Wickman, retirement administrator, in an email.
The action was taken at the investment committee meeting Nov. 29, he said.
Both Morgan Stanley, which manages a $165 million international value equity strategy, and FIAM, which runs a $120 million international small-cap equity strategy, have had longer-term underperformance, Mr. Wickman said.
A report by Callan, the $2.4 billion pension fund's investment consultant, contained in agenda material for the investment committee, said returns for the Morgan Stanley strategy over the five-year period ended Sept. 30 underperformed net of fees its benchmark, the MSCI EAFE index. For the same time period, it also ranked below the peer group median of other money managers, gross of fees, Callan said.
The Fidelity strategy saw gross-of-fee returns that ranked below the peer group median of other money managers for the five-year period ended Sept. 30, Callan said.
Callan recommended both strategies be re-evaluated for their watchlist status in a year unless "the investment committee determines a different course of action is required before then."
Charles Keller, a Fidelity spokesman, provided this emailed statement: "While we don't discuss individual client relationships, we are firmly focused on delivering strong, consistent long-term investment performance to meet our clients' distinct investment goals."
Morgan Stanley officials did not respond to a request for comment.