Troubles are mounting for Fisher Investments

Institutional investors already have pulled nearly $1 billion in assets from Fisher Investments as a direct result of sexist comments made by Kenneth L. Fisher, the firm’s founder, executive chairman and co-chief investment officer, at an Oct. 8 conference.

As the fallout from Mr. Fisher’s conduct progresses, more terminations totaling in the billions are possible as investment officers, boards of trustees and investment committees review their investments with the active equity manager.

As of Sept. 30, Fisher Investments and its subsidiaries managed a total of $112 billion, of which $35 billion was managed for 175 institutional investors and other money managers, according to the firm’s website.

To date, three U.S. pension funds have reported terminating Fisher Investments for a total of $904 million in direct response to Mr. Fisher’s behavior.

The $74.5 billion Michigan Retirement Systems, East Lansing, terminated Fisher Investments on Oct. 10 from management of a $600 million U.S. midcap equity strategy.

Jon M. Braeutigam, chief investment officer of the Michigan Bureau of Investments, which manages the state pension funds, termed Mr. Fisher’s comments “completely unacceptable” in a memo and that “prompt termination was the correct course of action.”

Assets from the Fisher redemption will be used to pay benefits, Mr. Braeutigam said.

Boston Retirement System’s board of trustees unanimously voted to terminate Fisher Investments from management of $248 million in international equities, said Timothy J. Smyth, executive officer of the $5.1 billion pension fund, in an email.

Trustees made their decision Wednesday in response to a letter from Boston Mayor Martin J. Walsh, who asked the board to terminate the firm because “the statements made by Ken Fisher implicate not only his own judgment, but potentially that of the company as a whole.”

Mr. Smyth said the pension fund will conduct a search for one or more managers to replace Fisher Investments for management of the international equities portfolio.

The investment team of the $5.4 billion Philadelphia Board of Pensions and Retirement met Oct. 9 and concluded that the pension fund “should immediately divest Fisher in order to protect the assets of the fund from the consequences of Mr. Fisher’s inappropriate statements,” spokesman Michael Dunn said in an email.

Mr. Fisher’s comments were “particularly incompatible with the board’s longstanding work on a variety of initiatives, including encouraging the advancement of women and diverse persons more broadly in the financial profession,” Mr. Dunn said.

Fisher Investments was terminated Oct. 10 from management of $54 million in U.S. equities after the pension fund CIO Christopher DiFusco received agreement from the board of trustees and Robert Dubow, the city’s finance director.

The assets redeemed from Fisher Investments will be transferred to existing passive manager RhumbLine Advisers, Mr. Dunn said. The board will decide later whether to hire another active manager to replace Fisher Investments, he said.

More redemptions are possible as investors review their relationship with the firm and conduct due diligence on its practices.

Florida State Board of Administration, Tallahassee, which manages a total of $203.7 billion, including the $163.5 billion Florida Retirement System, is examining its $175 million mandate with Fisher Investments in active U.S. value equities, spokesman John Kuczwanski said in an email.

“The State Board of Administration is committed to maintaining work environments that are diverse and free of all types of harassment and has significant concerns over the reported conduct (of Mr. Fisher). … We believe that diverse perspectives and a culture that encourages and includes those strengthens investment decision-making. We have been in contact with Fisher Investments regarding the issue and are continuing our due diligence,” Mr. Kuczwanski said.

Among other investors known to be reviewing their investments is Fidelity Strategic Advisers, a unit of Fidelity Investments, which has invested $500 million with Fisher Investments for subadvisory assignments. 

“We are very concerned about the highly inappropriate comments by Kenneth Fisher. The views he expressed do not align in any way with our company’s values. We do not tolerate these types of comments at our company and Fidelity Strategic Advisers is reviewing this relationship,” said Vincent Loporchio, a Fidelity spokesman, in an email. 

The $34 billion Iowa Public Employees’ Retirement System, Des Moines, has invested $386 million with Fisher Investments. 

The $210 million Haverhill (Mass.) Contributory Retirement System will review its $13 million investment with the firm at its Nov. 12 board meeting, said David van Dam, the pension fund’s administrator.

The $889 million Louisiana State Police Retirement System, Baton Rouge, also will review its $50 million U.S. small-cap equity mandate with Fisher at its next board meeting Dec. 11, said Kevin Reed, executive director. He said he “imagines that the firm will be put on watch.” The size of the pension fund’s investment with Fisher Investments could not be learned. 

Mr. Fisher apologized for his behavior at the conference in a statement, noting “I realize this kind of language has no place in our company or industry.”

John Dillard, a Fisher Investments spokesman, declined to comment on the redemptions and reviews by the firm’s institutional clients.

Bloomberg, James Comtois, Brian Croce and Rob Kozlowski contributed to this story.