Fairfield terminates Mellon over personnel changes, underperformance

The joint retirement investment board for the Town of Fairfield, Conn., terminated Mellon Investments, an affiliate of BNY Mellon Investment Management, as manager of a $22 million domestic equity strategy.

Members of the investment board, which jointly oversees the Town of Fairfield Employees' Retirement System and the Town of Fairfield Police and Firemen's Retirement System, voted last month to terminate Mellon due to personnel changes and underperformance, said Robert Mayer, the town's chief fiscal officer.

Assets of the two funds totaled $378 million as of the end of February, Mr. Mayer said.

The strategy was terminated due to a "combination of personnel changes and performance," Mr. Mayer said Monday, adding later that the active equity strategy "had been under discussion" prior to the termination over performance concerns.

The assets with Mellon have been invested in a BlackRock (BLK) S&P 500 index fund, but the board will discuss whether the money will stay in an index fund and, if so, what firm will manage the mandate, Mr. Mayer said.

The assets will probably not remain with BlackRock as Fairfield is already heavily invested in that manager, Mr. Mayer added. Fairfield has about $40 million invested with BlackRock.

Regarding personnel changes at Mellon, draft minutes from Fairfield's Feb. 27 joint retirement investment board meeting, said David Daglio, co-CIO of active equity at Mellon, was leaving the firm.

On Monday, Mr. Mayer declined to provide details on specific personnel changes that drove the decision to terminate Mellon. He added that the decision was due to "general turnover issues and general performance issues."

A BNY Mellon spokesman said in an email Monday that Mr. Daglio "has not left Mellon," but that "he will relinquish his active equity CIO role and opportunistic value portfolio management responsibilities effective March 29, 2019."

"(Mr. Daglio) remains a member of Mellon's board of directors and will continue to influence Mellon's direction and long-term success as a board director. His title remains (executive vice president) and active equity CIO until the 29th," the spokesman wrote.

The BNY Mellon spokesman declined to comment about the termination.