Indiana State Teachers' Retirement Fund, Indianapolis, selected new equity allocations for its $1.2 billion in defined benefit assets, and chose investment option styles for its $2.5 billion annuity savings account. The fund will invest in stocks for the first time following a change in the state constitution allowing it.
Allocations for the DB part of the fund are 36% U.S. equities, 10% non-U.S. equities, 6% REITs and 48% fixed income. Debt managers will be able to dip into non-U.S. and high-yield bonds, up to 10% in each type.
The annuity savings account, technically is part of the DB plan but is run like a defined contribution plan. Options available will be large-cap equities, small-cap to midcap equities, non-U.S. equities, a stable value fund and a bond fund.
Robert Newland, investment officer said RFPs for managers likely will be sent out in November or December. Trustees would like to use the same managers for both parts of the plan. Callan Associates assisted.
Office & Professional Employees, Local 153, New York, will be adding a 10% international equity allocation to its defined benefit fund's asset mix.
The change follows an asset allocation study done by Callan Associates. Funding for the new asset class will come from domestic equity and fixed-income managers, none of which will be terminated, said George Bueno, director of the $216 million fund. The rest of the new allocation is 48% U.S. stocks, 32% U.S. bonds and 10% real estate.
Trustees will meet in November to discuss implementation of the new asset allocation.
The MSCI World Index climbed 2.5% in dollar terms, in the third quarter. Also for the quarter, the MSCI EAFE Index fell 1.1% and the MSCI Emerging Markets Free Index slid 9.4%. Among developed markets, Finland topped the pack with a 19.9% return; Malaysia lagged with a 41.9% loss. Among emerging markets, the best performer was Mexico, up 21%; the Philippines Free index, down 45.4%, ranked last.
In September, the World Index was up 5.3%, while the EAFE advanced 5.5%. The Emerging Markets Free Index was up 2.6% for the month. Finland's market led with an 18.5% gain; Malaysia's came in last, with a -7.6% showing. Among emerging markets, Turkey bested the pack with a 23% leap; the China Free (investible) index, with a -16.6% return, ranked last.
The CREF Stock Account yesterday became the first fund managed by a single manager to top $100 billion under management. The fund, launched in 1952, was the country's first variable annuity. Two-thirds of the fund is indexed to the U.S. stock market and the balance is actively managed in domestic and international stocks. The fund has about 1 million shareholders.