Alameda County Employees' Retirement Association, Oakland, Calif., approved a new structure for its international equity asset class that includes a larger weighting to emerging markets.
The $9.8 billion pension fund's board approved changes to the structure at its remote meeting on Thursday, a webcast of the meeting showed.
In a presentation included with Feb. 8 investment committee meeting materials, investment consultant Verus Advisory recommended changes to the structure of the international equity portfolio, which has a target allocation of 24%, because the portfolio's relative performance has progressively weakened against the MSCI ACWI ex-U.S. IMI index. In the presentation, Verus recommended searches to replace existing managers Franklin Templeton and Mondrian Investment Partners, which are both on the pension fund's watchlist for performance reasons.
Neither the investment committee nor the board voted to terminate the managers or begin a new manager search. They did vote to approve the new structure with the understanding that staff and Verus would "revisit the active-manager weightings in this structure with the (investment) committee at a later date."
The new structure within the pension fund's international equity portfolio approved by the board on Thursday consists of 33% passive developed markets (up from 25% of the portfolio), 29% active developed markets (down from 55%), 28% emerging markets (up from 10%) and 10% active international small cap (which remains the same).
According to Verus Advisory's presentation, the existing international equity managers and their current portfolio sizes are BlackRock, which runs $589 million in passive developed markets; Mondrian Investment Partners, which runs $560 million in active developed markets value; Capital Group, $488 million in active developed markets growth; William Blair & Co., $213 million in active emerging markets; Franklin Templeton, $211 million in active small cap; and Bivium Capital Partners, $113 million in active developed markets core.
Stacey Coleman, spokeswoman at Franklin Templeton, could not immediately provide comment, and James F. Brecker III, head of global client service and business development at Mondrian, declined to comment.