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Phoenix City fund wants international managers as part of restructuring

Phoenix City Employees' Retirement System will conduct shortlist searches for three international equity managers to run a total of $180 million, said Greg Fitchet, investment officer.

The $2.6 billion pension fund is conducting the searches following Oct. 4 board approval of a restructuring of its international developed markets equities portfolio. The restructuring is the result of the March 2017 reduction of the international developed markets equity target to 9% from 16% and the creation of a new emerging markets equity target of 8%.

The changes in the developed markets portfolio resulted in the terminations of Grantham Mayo van Otterloo & Co. from a $114 million active value portfolio, State Street Global Advisors from a $79 million passive low-volatility portfolio and Mondrian Investment Partners from a $71 million active small-cap portfolio.

Baillie Gifford & Co., which runs a $199 million active growth portfolio, will be reduced to $77 million and its strategy changed to EAFE Pure Focus from ACWI ex-U.S. Alpha equities.

The fund will use $208 million freed up through terminations and reductions for emerging markets equity and also search for an active international value manager and passive international manager to run $77 million each, as well as an active small-cap manager to run $26 million.

Mr. Fitchet said investment consultant Meketa Investment Group will supply a shortlist of managers to consider within the next couple of months.