Search activity for the fourth quarter of 2022 increased by 25.5% from the prior quarter. The number of defined contribution searches decreased to three from 13 for the quarter. The number of service provider searches decreased slightly to 60 from 66, with 35 out of 60 searches for consultants and five for record keepers. CalPERS launched an RFP for general investment, private debt, private equity, and real estate consultant searches with the contract to start July 1, 2024. Traditional manager searches soared by 119%, mostly driven by strong interests in domestic equity and fixed-income strategies, with some non-U.S. activity from Global Fund Search. The number of equity searches jumped to 37 from 19 the prior quarter, and the number of fixed-income searches increased to 18 from four.
Notable activity for the quarter included Etablissement de Retraite Additionnelle de la Fonction Publique’s equity manager search. With equity accounting for 56.2% of its allocation, ERAFP seeks 11 managers and 10 standby managers to run its eurozone, European, and Japan socially responsible investing equity strategies divided into six lots. The amounts allocated are subject to change; two passive eurozone equity managers will each manage between €1 billion and €10 billion, and each active manager will manage between €500 million and €8 billion.
Border to Coast Pensions Partnership launched a £1.75 billion U.K. real estate manager search with consultant MJ Hudson’s aid. The fund invests in U.K. properties and is expected to grow to more than £3 billion with embedded active stewardship and ESG considerations during portfolio construction and asset management. Pennsylvania State Employees’ Retirement System issued a $2 billion active core and/or core-plus fixed-income manager search.
All information is based on transactions reported by Pensions & Investments’ global reporting staff.
Hiring activity decreased 38.5% from the previous quarter to $56.1 billion, mostly due to the sharp decline in outsourced CIO hires. OCIO hires dropped to $4 billion from $40 billion for the quarter, partially offsetting an increase in traditional manager hires to $10.3 billion from $6.9 billion in the previous quarter. The number of hires decreased 12.4% for the quarter to 494 from 564, and decreased 30% from the same period a year earlier. The number of defined contribution hires dropped to 11 from 34 in the previous quarter, and service provider hires dropped 29.4%. Interests in private equity and real estate slowed down, while real assets hires increased 42%.
Russell Investments was awarded two mandates in the fourth quarter totaling $2.37 billion, followed by Owl Rock Capital with three totaling $2.1 billion, and BlackRock with five mandates. Russell Investments and NN Investment Partners were hired as OCIO by Stichting Pensioenfonds Atos to manage its $2.3 billion and $842 million portfolios, respectively. New Hanover Community Endowment hired BlackRock as OCIO fiduciary manager to manage its $1.1 billion assets after the sale of New Hanover Regional Medical Center to Novant Health.
CalPERS committed a total of $2.1 billion to Owl Rock Capital: $1 billion to OR Diversified Lending (CP), $600 million to OR Diversified Lending co-investment, and $500 million to OR Diversified Lending overflow. Brookfield Asset Management was awarded eight mandates totaling $1.21 billion mostly for its infrastructure funds, with a $690 million commitment from Border to Coast Pensions Partnership and a $425 million commitment from Teachers’ Retirement System of the State of Illinois.
Illinois Firefighters’ Pension Investment Fund hired Brown Brothers Harriman and Garcia Hamilton & Associates to each manage $800 million active domestic fixed-income portfolios. Washington State Investment Board awarded a total of $1.4 billion real assets mandates to Global Infrastructure Partners and Stonepeak Infrastructure Partners.
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