Fresno County (Calif.) Employees' Retirement Association terminated AJO from a $111 million active domestic large-cap value equity portfolio.
The $4.5 billion pension fund's board approved the termination at its meeting Wednesday, said Donald C. Kendig, retirement administrator, in an email.
Jeffrey MacLean, CEO and senior consultant of Verus Advisory, the pension fund's investment consultant, recommended the termination in a memo to the board because of the recent reduction of AJO's staff, a loss of client assets under management and underperformance.
Mr. MacLean shared a July 27 memo to Vincent Francom, director of public markets at Verus, from AJO co-CEOs Ted Aronson and Gina Moore, announcing the firm is "reducing our footprint in light of reduced clients and assets."
AJO will let go of 16 employees over the next six months, of which five are part of the money's manager's 25-person investment team. Among those departing will be Michael Dowd and Jocelin Reed, principals and specialists within portfolio management and research, and Siddharth Ramesh, also a principal, in quantitative development.
"Our goal was to maintain the depth of our investment staff, while taking advantage of the efficiency gains technology has afforded us in the accounting and administrative aspects of our business."
AJO's assets under management fell to $12.1 billion as of June 30 from $18.7 billion six months earlier, according to Mr. MacLean's memo.
The pension fund "will overlay the proceeds until we decide whether we replace with an active or passive mandate, or choose another path," Mr. Kendig said.
Ms. Moore said in a telephone interview that the firm has had a very long and wonderful relationship with FCERA, which hired the firm in 1995, and appreciates the pension fund's patience.
In citing the overall struggles value investors have experienced over the past 10 years, Ms. Moore said, "It is a tough market. It's a tough environment for investors of our ilk, and what we were trying to do (with the firm's memo) is be as transparent and candid and share that with our clients as we could."