Chicago Public School Teachers' Pension & Retirement Fund is searching for an active international equity manager to manage a $200 million portfolio with core, growth and value strategies.
The $11.7 billion pension fund issued an RFP that was previously approved at its June 15 meeting following a change in the structure of its overall international equity portfolio, said Fernando Vinzons, chief investment officer, in an email.
At that meeting, staff and investment consultant Callan recommended simplifying the structure of the international equity portfolio after the board at its March 16 meeting approved a new target allocation, which included reducing the target to international equities to 20.5% from 30.5%.
The selected manager will manage active strategies benchmarked to the MSCI ACWI ex-U.S. index, MSCI ACWI ex-U.S. Growth index and MSCI ACWI ex-U.S. Value index and will have the discretionary authority with respect to the amount of assets devoted to each strategy within the overall $200 million portfolio.
As of Dec. 31, the international equity portfolio consisted of 55.5% ACWI ex-U.S., 25% MSCI EAFE, 12% international small cap and 7.5% emerging markets, according to a presentation included with June 15 board meeting materials.
Staff and investment consultant Callan recommended simplifying the structure by "eliminating the dedicated EAFE and Emerging Markets mandates since the other two components comprised of ACWI ex-U.S. and International Small Cap have overlap exposure to the same areas," according to the materials.
As of Dec. 31, the ACWI ex-U.S. managers were EARNEST Partners (managing $535 million), Lazard Asset Management ($527 million), William Blair & Co. ($524 million) and Leading Edge Investment Advisors ($121 million); the EAFE managers were Morgan Stanley Investment Management ($509 million), Ariel Investments ($70 million) and Strategic Global Advisors ($69 million); the international small-cap managers were William Blair ($190 million) and Dimensional Fund Advisors ($158 million); and EARNEST Partners ($182 million) was the sole emerging markets equity manager.
The sample mix included in the meeting materials was 88% ACWI ex-U.S. and 12% international small cap, although the specific mix will depend on the "candidates available after completing the search process," according to the June 15 presentation.
Mr. Vinzons said funding will come from the EAFE and emerging markets equity portfolios, and all managers are invited to bid for the new portfolio.
As of March 31, the actual allocation to international equities was 27.7%.
The RFP is available on the pension fund's website. Proposals are due at 4:30 p.m. CDT on Sept. 1. A timeline for a selection was not provided.
Callan is assisting with the search.