Searches and Hires

Ohio Bureau of Workers’ Compensation picks 4 transition managers, alters asset allocation

Ohio Bureau of Workers' Compensation, Columbus, hired four firms to provide transition management services, said Melissa Vince, spokeswoman, in an email.

The board of the bureau, which oversees $26.8 billion in insurance funds including the $24.7 billion State Insurance Fund, approved the hiring of BlackRock (BLK), Northern Trust Asset Management, Russell Investments and State Street Global Advisors at its meeting on May 24.

The bureau issued an RFP in January because some current external managers, which were not identified, have not been performing well, according to a previously issued report from Bruce Dunn, chief investment officer, and the bureau conducted the search in order to have transition managers under contract in case a termination becomes likely.

The bureau has not had transition managers since letting a contract expire on June 30, 2015.

Investment consultant RVK assisted.

Separately, the board approved a new target allocation for the State Insurance Fund recommended by RVK to reduce fixed-income interest-rate risk and optimize the expected risk-return profile.

The bureau reduced the target to active long-duration fixed income to 22% from 28% and created a new 4% target to passive domestic intermediate-term fixed income, which replaces the 4% target to passive domestic long-duration fixed income. The board also increased the targets to active domestic core-plus aggregate fixed income to 18% from 15%, core real estate to 9% from 7% and core-plus real estate to 4% from 3%.

Targets that remain unchanged are 20% domestic equities, 10% each passive international equities and passive Treasury inflation-protected securities, 2% value-added real estate, and 1% cash and cash equivalents.

As of March 31, the state insurance fund's actual allocation was: 27.9% active long-duration fixed income, 23.9% domestic equities, 12.9% active domestic core-plus aggregate fixed income, 11% passive international equities, 9% core real estate. 7.5% passive TIPS, 3.7% passive domestic long-duration fixed income, 2.5% core plus real estate, 1% value-added real estate and 0.6% cash.

How the changes will be implemented has yet to be determined.