Alaska Retirement Management Board, Juneau, hired three new international equity managers to run a total of up to $1.5 billion.
The board at its March 16-17 meeting approved hiring Legal & General Investment Management America to run up to $800 million in an international developed markets enhanced index equity strategy, and Acadian Asset Management and First Eagle Investment Management to run up to $350 million each in active international equity strategies, said Alysia D. Jones, board liaison officer, in an email.
According to a memo included with board meeting materials, current passive manager State Street Global Advisors, which as of Jan. 31 ran $1.6 billion in passive international equities and $622 million in passive emerging markets equities for the board, offers those products as commingled funds, and the staff and investment consultant Callan decided they wanted to have some passive exposure in global equities in separate accounts since the rest of the global equity portfolio is managed in separate accounts.
In discussing that possibility, the staff decided to explore an enhanced index strategy to achieve passive returns with a modest upside, and that "the opportunity exists for increasing the scale and breath of such investments, should an initial investment prove to be successful."
Separately, the hiring of Acadian and First Eagle represents the conclusion of a search approved by the board in June 2022 for one to three additional active international equity managers to run up to 40% of the assets currently managed by four incumbent managers for its pool of non-participant-directed plan assets.
As of Jan. 31, those managers were Arrowstreet Capital ($654 million in pool assets), Brandes Investment Partners ($527 million), Capital Guardian Trust ($464 million) and Baillie Gifford ($426 million), according to the meeting materials.
The recommendation to increase the number of active managers "will allow staff additional flexibility in making allocation decisions among managers without overdiversifying the portfolio of managers," according to a memo recommending the search included with June 16, 2022, meeting materials.
At the time, the board said funding would come from reductions in the portfolios of current active managers, and the new materials do not provide specific information on the amounts of the individual portfolio reductions.
Ms. Jones said in her email that the specific funding sources have yet to be determined.
The board oversees the management of a total of $39.9 billion in defined benefit and defined contribution plan assets, including the $23.1 billion Public Employees' Retirement System and $10.7 billion Teachers' Retirement System.