SPRINGFIELD - Board meeting minutes for the $15 billion Illinois Teachers' Retirement System of Illinois, obtained under the Freedom of Information Act, reveal $435 million in investment management changes.
Brandywine Asset Management, Wilmington, Del., was terminated; it managed a domestic equity portfolio of about $305 million.
Assets from the Brandywine equity portfolio were moved to other managers: $150 million to Newport Beach, Calif.-based Pacific Investment Management Co.'s Stocks Plus Fund, a hybrid of stock index futures and active bond management; $150 million to Oppenheimer Capital Management, New York, for an existing U.S. equities portfolio; and $5 million to Wayne Hummer Investment Management Co., Chicago, for domestic midcapitalization growth stocks.
Harris Investment Management Inc., Chicago, was terminated for a $100 million low-duration fixed-income portfolio. Atlantic Asset Management Partners L.L.C., Stamford, Conn., and Hotckis and Wiley, Los Angeles, received $50 million each; both firms will manage portfolios in the same low duration style.
A small-capitalization portfolio run by Brinson Partners Inc., Chicago, was reduced by $30 million.
Kaiser fund drops real estate investing
PLEASANTON, Calif. - The $600 million pension fund of Kaiser Aluminum & Chemical Corp. is eliminating its real estate allocation, totaling 7%of total assets, said Ronald Hutton, director-treasury.
"Our research shows real estate has a similar return profile to fixed income without the liquidity," he said.
The Kaiser fund will liquidate all of its real estate over several years. The allocation is run by seven real estate managers, which Mr. Hutton declined to name.
The proceeds will be invested in domestic fixed income with Frank Russell Trust.
Duluth Teachers rebalances fund
DULUTH, Minn. - The $180 million Duluth Teachers' Retirement Fund Association is rebalancing its assets closer to its 55% equity and 40% fixed-income mix, because of rising stock market returns and poor bond market performance, said J. Michael Stoffel, executive secretary.
The moves are the result of a quarterly rebalancing policy developed with its consultant Jeffrey Slocum & Associates.
The fund reduced equities to 57% from 61% and raised fixed income to 36% from 34% Officials believe the bond market will rebound and push the fixed-income allocation up to 40%.
The new policy guidelines call for the fund to rebalance every quarter to within five points of the target allocation.
Buck, Corroon sign agreement
NEW YORK - As expected, Buck Consultants signed an agreement to acquire consulting firm W F Corroon from its parent, brokerage firm Willis Corroon Group.
The deal was priced at $20.25 million in cash, with $10 million payable at closing and the remainder over three years; the sale is expected to close Nov. 30. W F Corroon's U.S. CEO, Rick Hauch, will take a senior position as group executive at Buck, with the St. Louis and Nashville offices reporting directly to him.
The acquisition will add substantially to Buck's health and welfare capabilities.
Roadway Express joins Teamster 401(k)
AKRON, Ohio - Roadway Express Inc. has agreed to offer the recently instituted International Brotherhood of Teamsters-sponsored 401(k) plan to its 19,000 Teamster employees.
Roadway is the largest Teamster employer to support the 401(k) plan, which was launched in April.
State Street Global Advisors is providing investment management, administration and support for the plan.
Crane Co. adding ESOP to 401(k)
STAMFORD, Conn. - Crane Co. will add an employee stock ownership plan to its $110 million 401(k) plan, said Gil Dickoff, treasurer.
The ESOP will become effective Jan. 1.
It will replace the company stock option now available in the 401(k) plan; no other changes are planned.
Crane is making the change because dividends paid to an ESOP are a tax-deductible expense for the company, according to Mr. Dickoff.
D.C. Retirement sues over realty deal
WASHINGTON - The $3.6 billion District of Columbia Retirement Board filed a lawsuit against Morgan Guaranty Trust, J.P. Morgan Investment Management and Silverstein Properties for allegedly losing more than $4 million in real estate investments.
The retirement board's charges in the suit include fraud, breach of fiduciary duty, negligent misrepresentation and breach of contract.
The suit alleges the managers invested $5.3 million in a combination warehouse/office property in New York as part of a $25
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million investment trust without getting a current appraisal and without getting 10- and 15-year financial projections, which were required by the DCRB. The board says its investment is now valued at $1.1 million.
Calls to Morgan Guaranty and J.P. Morgan were not returned.
Labor Department clarifies SIMPLE
WASHINGTON - The Labor Department soon will clarify that small businesses setting up SIMPLE individual retirement accounts have up to 30 days to ensure their workers' contributions are credited to their accounts.
The clock starts ticking from the last day of the month in which workers make the contributions.
To reflect this change, the Labor Department will be amending its participant contribution regulations issued in August, which give employers up to 15 working days to deposit the money in employees' accounts.
The new rule kicks in Jan. 1.
Minnesota Board rejects anti-tobacco proposal
ST. PAUL, Minn. - Trustees of the Minnesota State Board of Investment narrowly rejected a resolution to stop making additional investments in tobacco stocks for at least a year.
As of June 30, the fund had $320 million invested in tobacco-related manufacturers. The resolution, proposed by trustee Joan Anderson-Growe, said tobacco companies had become too risky because of the widespread threat of lawsuits against them. It also noted the Minnesota attorney general is suing tobacco companies to recover money spent on smoking-related health problems by state residents.
Master trust finalists named
SAN FRANCISCO - BHP Mineral International picked three finalists in its search for a single master trust bank for its $730 million in defined contribution and defined benefit assets. The finalists are Mellon, Northern Trust and Boatmen's.
A decision is expected before year end. The plans now use Mellon, Merrill Lynch and Vanguard, according to Nelson's Directory of Plan Sponsors.
Corporate governance panel at Philly fund
PHILADELPHIA - The Philadelphia Municipal Pension Fund, with $2.7 billion in assets, has set up a corporate governance subcommittee to review and develop guidelines for voting shares in companies in which it invests.
While most public pension funds have written guidelines on voting proxies, it is unusual for a fund to have a separate panel on the matter, according to Anne Hansen, deputy director at the Council of Institutional Investors.
Institutional Shareholder Services, which votes the fund's proxies, will assist in the effort.
Also, fund officials short-listed Rorer Asset Management, Paradigm Asset Management, Provident Investment Advisors and Ark Asset Management in their search for a large-cap value manager, said David A. Volpe, first deputy controller.
The new manager will replace Sirach Capital Management, which was terminated last year.
Fund officials also are seeking to replace Atalanta/Sosnoff as a large-cap growth manager; the firm will be terminated once a new manager is hired. Fund officials interviewed Lincoln Capital Management, Rittenhouse Financial Services, Morgan Stanley Asset Management, Brown Capital Management, Montag & Caldwell and Tiffany Capital Advisers as possible replacements.
A new large-cap value and a new large-cap growth manager are expected to be chosen at the Dec. 5 investment committee meeting.
Bell & Howell adds international
SKOKIE, Ill. - Bell & Howell Co. added Fidelity's Diversified International Equity Fund to its $263 million 401(k) plan, its first international option. Bell & Howell has 13 options through Fidelity, its bundled provider.
Carpenters pick six master custody finalists
ST. LOUIS - Carpenters Pension Trust of St. Louis narrowed its search for master custodian to six candidates, said John Stewart, controller of the $670 million fund. They are Citibank, Mellon, Mercantile, Northern Trust, State Street and the incumbent, Boatmen's, which is being acquired by NationsBank.
The fund hopes to make a selection in December.
The fund decided to search for a master custodian because it has been about five years since it last put the service out for bid. The timing of the search was coincident with Boatmen's acquisition.
Fiduciary Consultants is assisting the fund.