Phoenix City Employees' Retirement System hired two new domestic core fixed-income managers to run a total of about $270 million, said Greg Fitchet, investment officer.
The $2.4 billion pension fund hired State Street Global Advisors to manage about $180 million in passive domestic core fixed income and Longfellow Investment Management to run about $90 million in active domestic core fixed income. The pension fund also decided to retain Western Asset Management, but change its $90 million active domestic fixed-income strategy to a core strategy from core-plus.
The changes are the result of investment consultant Meketa Investment Group's recommendation to change the fixed-income portfolio to a "core-satellite" approach, utilizing traditional core strategies supplemented by managers in riskier, specialized strategies, from the existing "core-plus" structure. The pension fund also decided on a 50/50 active/passive approach, giving active and passive core fixed-income targets of 7.5% each.
As a result, the pension fund terminated Aberdeen Standard Investments and Pacific Investment Management Co. from their core-plus portfolios of about $140 million and $130 million, respectively.
Income Research & Management was the other finalist in the active core fixed-income shortlist search.
In June, the pension fund hired SSGA to manage about $170 million in a Treasury inflation-protected securities index fund for its 7% TIPS target. The pension fund will hire high yield, bank loans and emerging markets debt managers in 2018 for the "satellite" portion of the overall 33% fixed-income target. High yield, bank loans and emerging markets debt have targets of 5%, 3% and 3%, respectively.
