Ohio Public Employees' Retirement System, Columbus, terminated its $520 million emerging managers program at its board meeting on Wednesday, spokesman Michael Pramik confirmed in an email.
The $99.6 billion retirement system, which includes $85.9 billion in defined benefit fund assets, terminated the program because of underperformance as well as constraints on the universe of potential managers. The current composition of the program was established in 2012 following a restructuring that moved the program to direct investments with money managers from a manager-of-managers structure to reduce fees. The program has been open for Ohio-owned and minority-owned managers.
The constraints mentioned include the fact that the program only allows an upper limit of $1.25 billion in assets under management, a number that was actually increased in 2016 from $750 million to increase the size of the potential manager universe.
About 52% of program assets are domestic large-cap equities, 27% are domestic small-cap equities and 21% are domestic midcap equities. The program fulfills OPERS policy of investing up to 1% of assets to Ohio-owned and minority-owned external money managers that had been implemented since 2006. Staff will instead directly source these types of firms for the system's domestic and international equity allocations.
The managers in OPERS' emerging manager program, all running domestic equities, and their respective portfolio sizes, are:
- Affinity Investment Advisors, $78 million.
- Bowling Portfolio Management, $52 million.
- Dean Investment Associates, $85 million.
- Decatur Capital Management, $78 million.
- Matarin Capital Management, $76 million.
- Redwood Investments, $90 million.
- Winslow Asset Management, $60 million.
Regarding individual managers, Mr. Pramik said, "No immediate actions will be taken with the existing managers in the program. Staff will need time to identify a broader universe of potential candidates and then evaluate existing managers within the context of a restructured program."
Steven L. Spare, senior director, relationship management at Affinity Investment Advisors; Kathy Wayner, president, CEO and managing partner at Bowling Portfolio Management; Matthew T. Wallace, director of investments and retirement plan consulting at Dean Investment Associates; Marta Cotton, principal, director of client development at Matarin Capital Management; Jennifer Silver, founder, co-CIO and managing partner at Redwood Investments; and Gerald W. Goldberg, chairman, CEO and CIO of Winslow Asset Management, could not be immediately reached to provide comment.
Degas Wright, CEO, chief investment officer and portfolio manager at Decatur Capital Management, declined comment.