FORT WORTH, Texas -- American Airlines has three money managers -- Lazard Asset, Invista Capital and INVESCO -- running paper portfolios of international equities in its search for a new international equity fund manager.
William Quinn, president of AMR Investment Services, which oversees the $11 billion pension fund, said the new manager will receive at least $100 million after a decision is made in March.
Funding will come from other managers.
CalPERS evaluates alternatives, OKs corporate governance plan
SACRAMENTO, Calif. -- Staff for the $133 billion California Public Employees' Retirement System will evaluate seven investment managers for the fund's $1.2 billion timberland investment, one of the nation's largest holdings. Forest Systems; Timberland Growth; Wachovia Timber Investment Management; Hancock Timber Resource Group; Forest Investment Associates; The Campbell Group; and UBS Brinson will be evaluated, said Sheryl Pressler, chief investment officer.
Hancock currently manages the fund's timber holdings.
While CalPERS intends to increase its holdings, an amount has not yet been determined, she said. A selection could be made be made later this year.
Trustees also approved a corporate governance plan for the 1999 proxy season that calls for establishing alliances with institutional investors in France, Germany, Japan and the United Kingdom; providing an expanded Web site on proxy information; developing cutting-edge issues to be included in proxies; and promoting corporate governance issues worldwide.
Also approved was a $75 million commitment to ABS Capital Partners III, which invests in health care, technology, communications, media and consumer, industrial growth and financial service companies. Funding will be from cash.
Virginia develops formal rebalancing plan
RICHMOND, Va. -- The $29.1 billion Virginia Retirement System trustees agreed to develop a formal investment policy on rebalancing the investment portfolio periodically.
Currently, "We just kind of do it whenever it needs to be done," said Nancy C. Everett, deputy chief investment officer.
The system, whose domestic fixed-income exposure exceeds its targeted 25% of assets by $800 million, plans to move the excess from domestic fixed income to passive domestic equities over the next several months, she said.
The system plans to move $200 million into passive domestic equities, but hasn't decided how the money will be split between existing managers Bankers Trust Co. and Mellon Capital Management.
Trustees also will invest $157.5 million with existing venture-capital managers Olympus Growth Fund III, $50 million; Welsh, Carson, Anderson & Stowe VIII, $75 million; and New Enterprise Associates VIII, $32.5 million. Funding will come from cash.
Nevada PERS names international finalists
CARSON CITY, Nev. -- The $10.6 billion Public Employees' Retirement System of Nevada named finalists in its search for an active international equity manager. Capital Guardian, Hotchkis and Wiley, Lazard Asset Management and Scudder will be interviewed Nov. 23 for the $250 million. Funding comes from existing passive international equity manager Axe Houghton, which runs $800 million. Callan is assisting.
Alameda County OKs on-site real estate inspections
OAKLAND, Calif. -- The $3.1 billion Alameda County Employees' Retirement Association approved on-site inspections of its real estate properties for the first time.
The pension fund staff expects to start making inspections this month.
The on-site inspections will help fund officials make sure their properties exist and will continue to generate sufficient income, said Linda Brewton, chief investment officer.
The fund has invested about 4.7% of its assets in real estate.
Orlando Employees' revisits previous finalists
ORLANDO, Fla. -- The $600 million Orlando Public Employees' Retirement System is reviewing large-cap value finalists from a prior search to replace Fox Asset Management, after several Fox staffers resigned to form Osprey Capital Management, said Bruce Harter, treasurer.
Osprey, also under consideration, will manage the $45 million portfolio until a final decision is made later this year, he said.
Kalson & Associates is assisting.
Texas funds complete Social Security study
HOUSTON -- A study by the Texas Public Employee Retirement Systems, an association of state public pension funds, concludes mandatory Social Security coverage of Texas' public employees would cost $6.8 billion if federal legislation is passed next year to bail out Social Security.
Some of the money could come from pension contributions, city budgets and ultimately from taxpayers, said Bill Blythe, executive director.
The organization surveyed independent school districts, public employee retirement systems, cities, counties and specialized districts statewide with a total of 657 responses.
The report concludes: "To incorporate newly hired public employees into Social Security is bad public policy."
SEC begins studying Social Security reform
WASHINGTON -- The Securities and Exchange Commission is beginning to study Social Security reform proposals to advise lawmakers of the role it will need to play if American workers are allowed to invest portions of their payroll taxes in the stock market, SEC Chairman Arthur Levitt Jr. said in a speech.
The SEC, he said, "must be ready to undertake an unprecedented level of broad-scale policing of the equity markets" to ensure novice investors don't get ripped off through misleading or insufficient information. Moreover, government regulators will need to educate investors about the relationship between risk and return, diversification and the implications of cost on an investment portfolio over the long term.
The SEC also will examine the effect of government investment in capital markets, especially the potential for political interference in deciding which companies to invest in and how those companies are run, he said.
FASB seeks comments on proposals
NORWALK, Conn. -- The Financial Accounting Standards Board released a proposal that would amend Statement 66 on real estate sales and rescind Statement 75, which deferred indefinitely the effective date of the FASB statement on pension plan accounting by state and local governments.
The proposed amendment would clarify that the statement was meant to apply to all real estate transactions, including real estate with property improvements or integral equipment such as manufacturing facilities. The proposal would define what the board means by all real estate transactions, since some companies were applying Statement 66 to land sales but not to sales of operating facilities.
Comments are due Nov. 13.
Heitman and UAM will reorganize
CHICAGO -- Heitman Financial, an affiliate of United Asset Management, announced it has reached an agreement to reorganize Heitman into a partnership between the real estate investment firm's principal executives and UAM, which will result in a substantial increase in the pool of money UAM allocates to Heitman's commingled funds.
Separately, Norman Perlmutter, chairman and chief executive officer at Heitman Financial, also announced he will step down as CEO, effective Jan. 1, to be replaced by Jerome J. Claeys, III, Heitman's vice chairman.
PBGC may change lump-sum assumptions
WASHINGTON -- The Pension Benefit Guaranty Corp. is considering changing the assumptions used for calculating lump-sum payments to participants in pension plans it takes over, and is seeking public comment on the proposed changes, which would not be effective until after 2000.
The PBGC is proposing using the unisex life expectancy tables published by the IRS -- already used to calculate monthly lifetime pension benefits -- in calculating lump-sum payments. It also is considering whether to stop offering lump sum payments, and whether to continue calculating and publishing lump sum rates if discontinues their use.
Separately, the PBGC is seeking public comments on a proposal to simplify calculating benefits for the purpose of allocating assets of plans it takes over, and determining the amount of its claims against sponsors of underfunded pension plans. The PBGC is considering using only the annuity assumption, irrespective of whether the benefits are paid out as annuities or in lump-sums.
Deadline for comments for both proposals is Dec. 28.
CIGNA introduces new turnkey program
HARTFORD, Conn. -- CIGNA debuted a new turnkey quasi-bundled program for defined contribution plans with $1 million to $10 million in assets and fewer than 750 employees. CIGNASelect investment options, both internally and externally managed, include a self-directed brokerage window with access to 4,500 mutual funds and individual stocks and bonds.
Callan Associates and Ibbotson Associates independently review performance of investment options.
Daily valued record keeping and full plan administrative services are included. Internet access to account information is available to participants and plan level data is available for sponsors.