Lombard Odier International Portfolio Management and Western Asset Management have decided to stop marketing their 18-month-old fixed-income joint venture.
Objections from consultants, who wanted a separately staffed operation, led to the decision to stop marketing June 1, said Robert van Maasdijk, chief executive of Lombard Odier.
Western-Lombard Odier will continue managing the accounts the joint venture had won.
The U.S. 2nd Circuit Court of Appeals has dealt yet another blow to the IRS' challenge of interest rate assumptions by pension plan sponsors. In a June 6 ruling in Wachtell, Lipton, Rosen & Katz vs. Commissioner, the court upheld a lower court's decision that the law firm's 5% interest rate assumption for funding a defined benefit plan in 1986 was reasonable and called the IRS' arguments "unpersuasive." The IRS had argued the interest rate was artificially low in an attempt to allow the plan sponsor to maximize its tax deductions for contributions to the pension plan.
Loomis Sayles has provided an undisclosed amount of capital in the form of a convertible debenture to the Pinnacle Investment Advisors, formerly known as Ward/M&C Asset Management. Loomis may convert the debenture at any time to a 21% ownership stake in the 18-month-old minority-owned firm, which runs $60 million.
Towers Perrin formed an alliance with the Alexander Forbes Group, one of South Africa's leading actuarial consulting firms. The alliance would give Towers access to what is expected to be a booming business climate in South Africa. A Towers spokesman said many companies likely will re-enter South Africa following the election of the Mandela government, creating a need for expanded benefits and human resource consulting services.
The $900 million University of Michigan endowment fund hired 11 alternative strategy managers, investing a total $87.5 million, said Norman G. Herbert, investment officer and treasurer.
In venture capital, the fund placed $5 million each with China Walden Venture; WPG Corporate Development Associates Fund; Battery Ventures; and Kleiner Perkins Caufield & Byers. It also placed $15 million with the Summit Subordinated Debt Fund, which provides high-yield debt financing. For private equity, the endowment placed $10 million with Prudential Asia.
For oil and gas, the endowment invested $12.5 million with Merit Energy and $5 million each with Reimco and Vector Later Stage Energy Fund.
In real estate, the university placed $10 million each with Argo Partners and Acacia Housing Fund.
Cambridge Associates assisted.
American Airlines hired four emerging market managers to run about $175 million of its $3.5 billion defined benefit plan, said Dennis O'Hara, vice president-trust investments.
J.P. Morgan Investment Management will manage a balanced portfolio, while Morgan Stanley Asset Management and Salomon Brothers Asset Management will manage fixed-income portfolios. Gulfstream Global Investors will manage an equity portfolio. In addition, American hired Morgan Stanley to replace Chase Manhattan as global custodian.
United Asset Management reached an agreement to acquire Suffolk Capital Management, a New York-based growth equity manager with $875 million in assets under management, all tax exempt. The firm will continue operating under its own name and under the existing management. No other details were available.
The $100 million-plus BWIP International pension fund, Long Beach, Calif., hired three new money managers after unwinding a $67 million immunized bond portfolio.
Alliance Capital will manage $30 million in a core U.S. fixed-income portfolio and $5 million in a global fixed-income commingled fund. Putnam Investments will run a $20 million in a commingled EAFE fund. Fiduciary Trust International will run a $12 million U.S. small-stock portfolio.
Wells Fargo was terminated as the immunized manager but will continue to manage $20 in domestic indexed equities.
Susan Robinson, operating vice president, has been named to oversee the investments of the $745 million defined benefit plan and $635 million profit-sharing plan of Federated Department Stores. She replaces Susan Schertzer, also operating vice president, who left the company. Ms. Robinson also will continue to be responsible for Federated's investor relations and its credit company.
The $22 million Waterford (Mich.) Police and Fire pension fund hired Capstone Asset Management to run $5 million in a balanced portfolio, said John Dean, chairman. Assets came from a reduction in the portfolio run by the fund's only other manager, Bartlett Financial.
Michael Fanning has been named CEO of the $3.3 billion Central Pension Fund of the International Union of Operating Engineers, a new position, effective Sept. 1. He was the union's general counsel.
Peppermill Casinos hired IDS Institutional Retirement Services to provide bundled services to its new 401(k) plan. IDS will provide daily record keeping, trust services, employee education and communication and five investment options.
Federated Investors introduced a new series of lifecycle asset allocation funds believed to be the first specifically for the bank fiduciary market.
The four funds in the Managed Series Trust will be tailored to meet differing participant risk tolerances, from conservative to aggressive, and will each invest across at least 10 asset classes.
The funds will be managed by Federated Management.
Neuberger & Berman Management joined Buck Consultants' mutual fund alliance, 401(k) Connections. Eight funds from Neuberger & Berman will be available.
Two European privatization funds are pulling in record investments for investment trusts in the United Kingdom.
The Kleinwort European Privatisation Investment Trust PLC closed last week at 500 million. Institutions placed 320 million in the trust, which was more than three times oversubscribed.
The Mercury European Privatisation Trust promises to be even bigger. Mercury closed the institutional placement at 325 million last week. It now is raising up to another 250 million from financial planners and individuals.
John W. English, who retired last year as the chief investment officer of the Ford Foundation, has been awarded the Lillywhite Award for outstanding lifetime contributions to Americans' economic security. The award, sponsored by the Employee Benefit Research Institute, was presented at Pensions & Investments Investment Management Conference in New York.
The College Retirement Equities Fund, part of TIAA-CREF, will introduce two equity funds July 1.
The CREF Growth Fund will actively manage growth stocks of all market capitalizations, but will concentrate on small to medium-sized companies. The fund will invest in U.S. and foreign markets opportunistically, said John McCormick, executive vice president for pensions and annuity services.
The CREF Equity Index Fund will use the Russell 3000 as its benchmark, but will enhance the index by investing in only a sampling of the stocks, seeking to emulate the overall investment characteristics of the whole index.
Thomas L. Bianco, who was heading product development for Alliance Capital Management's effort to introduce a family of hedge funds, has joined PaineWebber as managing director of capital markets, a new position. Mr. Bianco will oversee new issue equity product and become chairman of its equity commitment committee.
The name of Mr. Bianco's replacement or how this will affect Alliance's hedge fund effort couldn't be learned by press time.
The $20 million-plus pension fund of Plumbers & Steamfitters Local 77, New Bedford, Mass., hired Bank of Ireland for an international equities account of about $1 million, said John Driscoll, the union's business manager.
No other information was available.
John J. Kane and Ernesto Ramos joined Nicholas-Applegate Capital Management in new positions as research director and research manager of the global/systematic portfolio management and research team, respectively.
Mr. Kane was previously director-quantitative investment of ARCO Investment Management and Mr. Ramos was an investment strategist in the international equity group at Batterymarch Financial Management.