The $12 billion Teachers' Retirement System of Illinois - concerned about the U.S. dollar and the fund's hefty international investments - hired a new currency overlay manager and renewed its relationship with two others.
Donald J. Nesbitt, chief investment officer, said the fund hired Pareto Partners and retained Zimmerman Investment Management Co. and A.G. Bisset.
The fund also had dropped The RXR Group, turning over its assignment temporarily to Zimmerman. Callan Associates Inc., Santa Monica, Calif., assisted in the searches.
Each manager will hedge about $300 million in currency exposure, or about 80% of the fund's total $1.4 billion in international equities.
The other 20% of the currency exposure is hedged directly by the equity managers.
The fund also has $1.4 billion in international fixed income, which is hedged by the managers.
The fund will pay the three currency overlay managers performance-based fees based on a benchmark of a 50% hedged position.
Mr. Nesbitt said the board is concerned about its currency exposure and the effect of a rebounding dollar. The fund has $2.9 billion - or nearly 25% of total assets - invested internationally. Also, the dollar is near a low and may begin to rebound, which would cause currency losses on international assets.