Ontario Teachers' Pension Plan Board, Toronto, and Stichting Pensioenfonds ABP, Heerlen, The Netherlands, engaged in what is believed to be the first-ever direct equity swaps between two pension funds.
The funds engineered two swaps of the Toronto 300 index and the Dutch AEX index with a total value of $60 million. The Ontario fund receives the total return of the AEX index; ABP receives the Canadian stock index return.
By not using an intermediary, the funds avoided brokerage commissions, market impact costs or swap spreads. The swaps also helped the teachers' fund raise its international exposure without violating the 20% cap on foreign investment imposed by Canadian law.
ABP has 272 billion guilders ($133 billion) in total assets. The Ontario fund's total assets are C$55 billion (U.S.$39 billion).
California Public Employees' Retirement System's board of trustees, facing potential state legislative hearings concerning political contributions and gifts from money managers, has banned political contributions to board and senior staff members and some fund consultants. The $128 billion system also adopted a policy requiring disclosure of all gifts to those groups.
Sacramento-based CalPERS also made several alternative investment commitments: $75 million to Aurora Equity Partners II, a fund targeting middle- and small-market companies; $125 million to Beacon Group Energy Investment Fund II; and $150 million to CVC European Equity Parners II, which invests in European management buyouts.
IMC Global Inc., Northbrook, Ill., added a profit-sharing plan for its salaried employees. About 60% of participants in the company's $114.5 million defined benefit plan have opted to join the new plan, said Claudia Davidson, manager of pension benefits. No money will be transferred from the defined benefit plan to the new plan, but each employee who opts for the new plan will receive the company's profit-sharing contribution at the end of 1998, she said.
The new plan's record keeper and administrator, Marshall & Ilsley, will be the same as IMC's 401(k) plan. The options also will be the same: Marshall & Ilsley Stable Principle Fund, Bond Fund of America, Vanguard Wellington Fund, Fidelity Equity Income Fund, Vanguard Index Trust 500 Fund, Fidelity Magellan, Templeton Foreign Fund, Franklin Balanced Sheet Investment Fund and IMC Global stock.
Capital Resources, the former consulting arm of SEI Corp., has finalized a joint venture agreement with Hedge Fund Research of Chicago to create Capital Hedge Fund Advisors, said William Nicholson, CEO of Capital Resources. The joint venture will allow Capital Resources to offer alternative investment fund advice to clients.
In addition, Capital Resources is expected to announce the acquisition of another consulting firm in the next two weeks.
Massachusetts Painters District Council No. 35, Roslindale, Mass., may merge its pension assets with those of the Glaziers & Glassworkers Local 1044, following a recent merger of the unions, said Sharon Saganey, fund administrator for the $75 million plan. The glaziers fund has $20 million in assets, according to Nelson's Directory of Plan Sponsors.
Amesbury (Mass.) Town Retirement System is reviewing its asset allocation over the next couple of months with help from Advest Custom Consulting, said Sheryl Trezise, retirement administrator. The $19.5 million fund's target mix is: 30% to 43% U.S. stocks; 25% to 40% U.S. bonds; 5% to 15% non-U.S. stocks; 5% to 10% REITS; 0% to 5% alternative investments; and 0% to 5% cash.
The fund hired Fiduciary Trust International as its first small-cap equity manager. The firm will manage 5% of the fund's total portfolio. The funding source has yet to be determined. Managers' returns on global balanced portfolios for Hong Kong pension funds ranged from a high of 16.9% to a low of -37.8% in 1997, according to Watson Wyatt Hong Kong Ltd. The median return was -7.3%.
Only six out of 24 managers reporting data posted overall positive results last year. They were: Scudder, Stevens & Clark Asia Ltd., up 16.9%; J.P. Morgan, 9%; Principal Insurance, 6.7%; LGT Asset Management, 5.6%; Morgan Grenfell, 2.4%; and Rothschild Asset Management, 0.9%, Watson's survey showed.