Indiana Public Retirement System, Indianapolis, will select one of three finalists to replace BlackRock as manager of an $850 million customized passive global inflation-linked fixed-income portfolio for its $44.2 billion defined benefit plan.
The retirement system’s board at its Dec. 13 meeting determined Northern Trust Asset Management, State Street Global Advisors and UBS Asset Management’s similar strategies all had comparable performance, and it would not be violating its fiduciary responsibilities by complying with Indiana Treasurer Daniel Elliott’s June action to place BlackRock on a watchlist due to BlackRock’s environmental, social and governance-related investments.
The retirement system had issued an RFP in July following Elliott’s announcement, saying a replacement would be hired only if at least one manager displayed comparable performance history to BlackRock’s strategy.
With the board’s Dec. 13 action, investment staff is now free to hire one of the three finalists. The specific timeline for the hiring was not provided, just that it would occur sometime after the board meeting.
In a June 19 letter to Abhilash Reddy, Elliott’s chief of staff and legislative counsel, Peter Vaughan, managing director and senior counsel at BlackRock, said its portfolio is a customized passive strategy that tracks the performance of the Barclays Global Inflation-Linked 1-10 Years USD Hedged index and excludes exposure to the U.S., Italy and Spain, and it does not have any ESG component or screen.
As of Oct. 31, the pension plan’s actual allocation to inflation-linked fixed income was 13.8%.
