SACRAMENTO, Calif. -- The California Public Employees' Retirement System and Progress Highcrest Advisors will invest $3 million to acquire a 15% stake in Arrowstreet Capital, the first move by the $175 billion fund's manager development program.
Arrowstreet, formed last July by former PanAgora Asset Management executives, will run $100 million in an active international equities portfolio for Sacramento-based CalPERS, increasing Arrowstreet's assets under management to nearly $330 million.
Progress Highcrest is a new joint venture between Progress Investment Management and Putnam Lovell Capital Partners. Through Highcrest Capital Partners, Putnam Lovell already owns a 15% stake in Arrowstreet.
CalPERS' manager development program seeks new and emerging managers lacking long-term track records. CalPERS and Progress Highcrest will provide firms with business management, infrastructure and other support. CalPERS expects to realize profits from its equity stakes when such firms go public, the position is bought out or the firm is sold.
CalPERS provided more than 90% of the $3 million in funding in the Arrowstreet deal.
Private equity, small caps get boost from Worcester
WORCESTER, Mass. -- The $600 million Worcester Retirement System raised its private and small-cap equity asset class allocations by two percentage points each to 5%and 10% respectively.
The fund also will reduce fixed-income to 25%from 27%and large-cap equity to 35%from 37% said Jim DelSignore, city auditor and trustee. The allocations to international equity and real estate -- 15%and 10% respectively -- will be unchanged.
The new target allocations are the result of an asset-liability study, Mr. DelSignore said. Next up: deciding which of the plan's 25 managers will be affected; none has been terminated so far.
New Orleans city fund lists 25 convertibles finalists
NEW ORLEANS -- The $375 million New Orleans City Employees' Retirement System has a list of 25 finalists in its search for a convertibles manager to run $15 million to $20 million, said Jerry Davis, chairman.
Consultant Morgan Stanley Dean Witter recommended the move into the asset class. Funding likely will come from the plan's large-cap equity portfolio. A decision is expected by the end of August.
Also, the fund terminated Denver Investment Advisors' $10 million active small-cap domestic value portfolio due to concerns about personnel turnover at the firm. The portfolio was turned over to recently hired active international equity manager Waddell & Reed. Ken Penland, Denver chairman, said the fund had a "legitimate concern" with its turnover and that it was disappointed with its performance.
Sacramento DC plan reviews administrator bids
SACRAMENTO, Calif. -- The Sacramento Municipal Utility District is reviewing proposals in response to its RFP for a defined contribution plan administrator. The district has two plans, a $64 million 457 plan now administered by Great West, and a $58 million 401(k) plan administered by Merrill Lynch, said Debra Dixon, human resources analyst.
The district wants to hire one administrator to handle both plans. A decision is expected before the end of June.
ALARIS Medical Systems eyes conversion to cash balance
SAN DIEGO -- ALARIS Medical Systems is conducting a feasibility and asset allocation study of its $16 million defined benefit plan.
One possible outcome would be converting the fund, which has been frozen since 1993, into a cash balance plan, said Julie Adamik, manager, employee benefits.
The study should be complete by late summer.
S&P, MSCI ready to begin new global classification system
NEW YORK -- Standard & Poor's and Morgan Stanley Capital International will launch a new global industry classification standard by July 1, said Elliott Shurgin, S&P vice president of index products and services.
The new classification will comprise 10 economic sectors instead of the 11 now used by S&P. Transportation will become an industry group within the industrials sector. Among other changes: consumer cyclicals will be changed to consumer discretionary; new retailing/Internet/catalog industry groups will be added; a new media industry group including advertising, broadcasting, movies and publishing sub-industries will be added; and restaurants will be moved from consumer staples to consumer discretionary, aligned with casinos, hotels and leisure facilities.
"The old version was geared toward the U.S., while the new one will work for investors everywhere," Mr. Shurgin he said.
Cahill, Warnock markets new Strategic Partners fund
BALTIMORE -- Cahill, Warnock & Co. LLC is marketing Cahill, Warnock Strategic Partners Fund II, with a target of $250 million, said Don Hughes, chief financial officer.
Investors in the firm's $125 million Fund I include the $250,000 pension fund of the Mercantile Safe Deposit & Trust Co., Baltimore; $13 billion endowment of Howard Hughes Medical Institute, Chevy Chase, Md.; $2.7 billion endowment of Duke University, Durham, N.C.; and the $405,000 endowment of the National Gallery of Art, Washington.
The new fund will use the same strategy of investing in public companies with market caps of less than $300 million, said Mr. Hughes.
5 finalists in county's large-cap value search
ATLANTA -- The $925 million Fulton County Employees' Pension Fund named five finalists in its search for a new large-cap value manager: Sanford C. Bernstein; Equinox Capital; INVESCO; Wellington; and J.P. Morgan.
The plan will allocate $50 million to the new manager. The search is the result of an asset allocation study. A funding source has not yet been determined.
Watson Wyatt is assisting. A decision is expected this summer.