Emerging markets eyed
J.C. Penney Co. will be considering adding an emerging markets mandate of $25 million to $30 million to its $3 billion pension fund during the first half of 1998, said Michael Dastuque, financing projects manager.
The Penney fund probably has less than 1% of its total assets in emerging markets now, through its current international managers, which are allowed to invest in the asset class.
A manager probably won't be hired for at least six months.
Frank Russell is assisting.
Acquisitions scouted
Palley-Needelman Asset Management is interested in buying a value-oriented investment management firm that will either broaden Palley-Needelman's product line, provide distribution to different markets, add talent or help develop a subadvisory private label product, said CEO Chet Needelman. The firm has about $5 billion under management.
Virginia picks partnerships
The $28.1 billion Virginia Retirement System will invest $100 million with Joseph Littlejohn & Levy Fund III, which acquires controlling interest in companies prime for restructuring.
The system also will invest $30 million with MCPI, a real estate partnership, and $50 million in its first overseas real estate investment with Security Capital Global Real Estate, a new partnership investing in commercial real estate in western Europe. Funding will come from cash. The system already has $60 million in Joseph Littlejohn & Levy's Funds I and II.
AIM names equity chief
Edgar M. Larsen was promoted to chief equity officer of AIM Capital Management and will continue as lead portfolio manager of the AIM Capital Development Fund. He joined AIM two years ago as a vice president and chief portfolio manager from the Criterion Group. Mr. Larsen replaced Scott Lucas, who left in July.
N.Y. Common allocates
The $95 billion New York State Common Retirement Fund committed $33 million to Warburg Pincus Ventures International, an $800 million international private equity fund.
The fund also made an additional $200 million allocation to an emerging markets portfolio managed by Barclays Global. The firm's portfolio for the fund had been $97 million. The allocations will be funded from cash.
PKE hires 2 for equities
The 5.2 billion Swiss franc (U.S.$3.6 billion) Pensionskasse der Schweizerischen Elektrizitatswerke hired Templeton Worldwide to manage a $50 million global emerging markets equity portfolio, said Franz Winkler, head of capital markets.
The fund also picked Morgan Grenfell Investment Management to run a 50 million Swiss franc ($35 million) European small-cap equity portfolio.
Both portfolios will be funded from cash. Pension Portfolio Consulting was the consultant.
Colorado hires PIMCO
The Colorado Public Employees' Retirement Association's $259 million 401(k) plan hired PIMCO to manage a $21.6 million long-term bond fund and dropped Norwest Bank, which had been managing the assets.
A spokesman for the plan said the switch was prompted by portfolio management changes at Norwest. Norwest officials declined to comment. Mercer assisted.
Pension knowledge scant
Even though 401(k) plans are soaring in popularity and cash flow, most participants don't understand the basics about how their plans actually work, according to a joint survey by AARP Investment Program and Scudder.
Some 28% of workers over age 55 admit they don't know how, or in what form, they will receive their retirement benefits. About 25% of participants don't know what it means that their retirement plans are tax-deferred.
Only about half of participants know that early withdrawal of retirement savings will result in penalty taxes.
Sterling Heights hires
The $165 million Sterling Heights (Mich.) Retirement System hired Loomis Sayles as a small-cap value manager to run $15.5 million. Funding will come from reducing the allocation to large-cap value manager Newbold's Asset Management, which currently manages $47.5 million. Merrill Lynch assisted.
More changes could take place, depending on the implementation of a new asset mix that includes increased international equity and real estate targets, said Larry Amez, board president.
Enid taps Norwest
The City of Enid, Okla., hired Norwest Bank as manager of its $9 million defined benefit plan and bundled provider for its $2 million 401(k) plan.
The defined benefit plan will be invested in a balanced portfolio. Investment options have not been selected for the 401(k), but officials expect to offer between seven and 10 Norwest funds and three non-Norwest funds. Assets of the plans had been commingled through Boatmen's Trust.
University selects 3
The University of British Columbia Faculty Pension Plan hired Putnam and Lazard Freres as emerging markets equity managers and Guardian Capital as a small-cap manager.
Putnam and Lazard will each handle C$25 million (U.S.$17.6 million) in emerging markets stock, which will be funded from both firms' EAFE portfolios and from existing Canadian stock managers. No managers will be terminated.
Guardian Capital will manage C$30 million (U.S.$21.9 million) Canadian small-cap portfolio for the C$900 billion (U.S.$632.8 million) fund. The assets for this new portfolio will come from Guardian and Conner, Clark & Lunn's existing large-cap equity portfolios. SEI assisted.
Carpenters pick Putnam
The Carpenters Labor & Management Pension Funds hired Putnam Institutional Management to manage $20 million in domestic core growth equity. Putnam replaces a manager the $172 million fund terminated earlier this year, said consultant Tom Mitchell Sr. of Marco Consulting. He would not name the firm.
Real-time index pricing
ING Barings last Friday announced real-time pricing for its Latin America index, making it the first regional emerging markets index to be calculated in real time, the firm said. The index is now calculated and updated every 15 seconds by Reuters.
The index measures the performance of 118 stocks in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. Year-to-date, the index has advanced 22.21%.
New options offered
Options on 3-month Euromark futures and on Schatz futures will begin trading Feb. 12 at Deutsche Terminborse, the German futures and options exchange.
The 3-month Euromark future is a contract on the interest rate for 3-month euro deposits. Schatz futures, traded exclusively at the DTB, are contracts to buy or sell German federal government bonds with a maturity of 13/4 to 21/4 years.
PRIM exec joins Allegis
Jeffrey G. Maguire joined Allegis Realty as a senior vice president responsible for product development and research, a new position. Mr. Maguire recently served as senior investment officer, real estate, for the $18 billion Massachusetts Pension Reserve Investment Management Trust. A search for a replacement is under way.
Variable annuity expands
Equitable Distributors added managers for its variable annuity program, EQ Trust.
Added as of Jan. 1 will be three indexed options, based on the S&P 500, the EAFE and a small-cap composite index, run by Bankers Trust. Also, Lazard Freres will manage a large-cap value and a small-cap value fund; J.P. Morgan will manage a core bond fund; and Morgan Stanley will manage an emerging markets fund. The total number of funds in the EQ Trust will be 12.
The trust likely will be made available to the 401(k) plan market in 1998.
Long Island reviews assets
The Long Island Lighting Co., Hicksville, N.Y., is conducting an asset allocation review of its $840 million defined benefit plan and $100 million VEBA trust. The studies are expected to be done within the coming months.
