Austin (Texas) City Employees' Retirement System hired four new fixed-income managers in the final step of restructuring the $2.7 billion defined benefit plan's roughly $549 million bond portfolio.
In December, COAERS's board of trustees approved a plan to eliminate the pension fund's two core bond portfolios and broaden the asset mix to include mortgages and U.S. credit, said David T. Veal, chief investment officer, in an interview.
COAERS awarded allocations of 4% of total assets (about $108 million) each to PGIM, Loomis Sayles & Co. and DoubleLine Capital for management in active fixed income, investment-grade credit and mortgages, respectively. Hoisington Investment Management was hired to manage a 2% allocation ($54 million) in a macroeconomic fixed-income strategy.
Agincourt Capital Management was terminated from a $396 million core fixed-income allocation and was reassigned to manage a 4% allocation to short-term U.S. Treasury bonds and a 2% investment in long-term U.S. Treasuries, Mr. Veal said.
Northern Trust Asset Management was terminated from management of $153 million in core bonds.
Most of the funding for the new bond portfolio managers came from the termination of the core bond portfolios managed by Agincourt and Northern Trust, and AQR Capital Management from a $130 million risk-parity strategy.
Mr. Veal said AQR was terminated because the strategy no longer fit into the pension fund's investment strategy.
About $78 million of AQR's allocation was given to a new manager, Legal & General Investment Management, to manage in a Standard & Poor's 500 index fund and the remaining $52 million went to fund part of Hoisington's macroeconomic strategy, Mr. Veal said.