Alameda County Employees' Retirement Association, Oakland, Calif., will launch a search for an active emerging markets equity manager to run about $304 million sometime in the second quarter and an active international small-cap equity manager to run about $217 million sometime in the first quarter of 2024.
The $9.8 billion pension fund will search for the managers following the board's approval at its April 20 meeting of a plan to implement structural changes to its international equity asset class, spokesman Michael Fara said in an email.
Previously, at its Feb. 16 meeting, the board approved investment consultant Verus Advisory's recommendation to make 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. The structure approved in February within the pension fund's international equity portfolio 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).
The existing international equity managers and their portfolio sizes as of Feb. 16 were 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.
At the April 20 meeting, the board approved new manager-specific recommendations from Verus Advisory, which includes a search for an additional emerging markets equity manager, as well as a search for an international small-cap manager to replace Franklin Templeton, which is on watch for performance. The recommendations also include terminating Mondrian for performance. Neither termination was specifically approved by the board at the meeting.
Other changes include increasing BlackRock's portfolio to 33% of the overall international equity portfolio, or about $717 million; reducing Capital Group's portfolio to 15%, or about $326 million; increasing Bivium Capital and William Blair to 14% each, or about $304 million each.
Stacey Coleman, spokeswoman at Franklin Templeton, and James F. Brecker III, head of global client service and business development at Mondrian, declined to comment.
Further details regarding a timeline for the RFPs have yet to be determined. ACERA historically has posted RFPs on its website. Verus Advisory will assist with the searches.
As of Dec. 31, the actual allocation to international equities was 24.7%; the target is 24%.
Separately, also at the April 20 meeting, the board approved a commitment of up to $38 million to Crestline Opportunity Fund V, a private credit fund managed by Crestline Investors. It is ACERA's first commitment to the manager.
As of Dec. 31, the actual allocation to private credit was 2.6%; the target is 4%.