San Diego City Employees' Retirement System hired Aon Hewitt Investment Consulting as its general investment consultant, according to a recording of the board's recent meeting.
The board of the $9 billion pension fund made the selection March 13 following an RFP. Aon was the incumbent and was first selected in 2010. Cortex Consulting Services assisted.
Separately, the board restructured its $1.7 billion U.S. equity portfolio to eliminate an overweight to small-cap equities. SDCERS officials consolidated its U.S. equity index funds into one fund and will replace its two active small-cap equity managers with an active smidcap equity manager.
Aon has launched a search for a new smidcap equity manager to run about $107 million, with a selection as early as the board's May meeting.
The pension fund has $71 million invested in Dimensional Fund Advisors' U.S. small-cap value equity strategy and $78 million in Fisher Investments' small-cap value equity fund. Once a smidcap manager is hired, SDCERS will terminate Dimensional and Fisher.
The pension fund is also transferring $1.1 billion from its S&P 500 and Russell 2000 index portfolios to a Dow Jones U.S. Total Stock Market index strategy. SDCERS will hire a new manager for that portfolio.
Currently, BlackRock manages a $934 million S&P 500 index portfolio and a $159 million Russell 2000 growth index portfolio. Allianz Global Investors will continue to manage two mandates: a $252 million convertibles portfolio, down slightly from $257 million, and the same $282 million structured alpha portfolio.
Separately, CIO Liza Crisafi told the board the investment staff rebalanced by selling $150 million of its short-term assets in light of the downturn in equities.
"Those assets actually have positive returns," Ms. Crisafi said. "We took the action to reserve enough cash so that we are covered for benefit payments and any capital calls that need to be funded or any new investment that needs to be funded" through June 30.
If there is other market volatility, the pension fund is in "a very good place with four months of cash on hand," she said.
