Austin (Texas) City Employees' Retirement System made changes to the fund's $845 million U.S. equity portfolio during a board of trustees meeting Tuesday.
Trustees approved investment of $130 million in Mellon Capital Management's actively managed dynamic U.S. equity strategy. The hire is the fund's first with Mellon Capital, part of BNY Mellon Asset Management North America.
Funding for the hire will come from the reduction of a $590 million separately managed passive account run by Northern Trust Asset Management using the SciBeta United States Multi-Beta Multi-Strategy Four-Factor EW index, said David T. Veal, chief investment officer.
As a part of the restructuring of the fund's U.S. equity allocation, the $2.6 billion pension fund also approved moving 50% of the remaining $460 million in the index account to a new separate account managed by NTAM.
The new account will be managed in another index recently developed by ERI Scientific Beta – the SciBeta United States High-Factor-Intensity Multi-Beta Multi-Strategy Six-Factor EW index.
Mr. Veal said the new factor-based index is designed to eliminate the overlap in risk-premium factors that is present in the Scientific Beta index COERS currently invests in.
The board agreed that if the new index meets expectations, the approximately $230 million managed in the older index will be moved to the new separate account.
Also, Fidelity Capital Markets was approved as the transition manager for the changes to the U.S. equity portfolio, Mr. Veal said.
Separately, Mr. Veal said the pension fund hired Albert Hicks Jr. on March 19 as portfolio manager, a new position, increasing investment staff to two professionals.
Mr. Hicks has day-to-day oversight of the fund's investment managers and is responsible for sourcing new investment ideas and strategies to enhance the risk-adjusted returns of the fund, Mr. Veal said. He also will lead the fund's previously announced structural review of its $560 million fixed-income portfolio later this year.
Mr. Hicks was vice president with responsibility for private equity investments for EF Capital Management, a Dallas-based family office.