Illinois Municipal Retirement Fund, Oak Brook, approved hiring an active international equity manager and commitments to four alternative investment funds, all totaling up to $453 million.
The $56.4 billion pension fund’s board approved the actions at its Dec. 20 meeting, said Angela Miller-May, chief investment officer.
Within international equities, the board approved hiring ARGA Investment Management to run up to $250 million and terminating Franklin Templeton from a $259 million active international small-cap equity portfolio, Ativo Capital Management from a $191 million active developed markets large-cap portfolio and Lazard Asset Management from a $166 million active international value equity portfolio.
The actions were taken as a result of an international equity portfolio review. Investment consultant Wilshire Advisors, which assisted in the review, recommends such studies every three to five years.
Staff and Wilshire recommended terminating Franklin Templeton, Ativo and Lazard due to ongoing “performance challenges,” and recommended graduating ARGA to a direct mandate from its current status as an emerging manager in a manager-of-managers portfolio overseen by Xponance.
Funding for the ARGA portfolio will be funded by the terminations, and the remaining assets from the terminations will go toward rebalancing and/or liquidity purposes.
Spokespeople for the terminated firms could not be immediately reached for comment.
As of Sept. 30, the pension fund’s actual allocation to international equities was 20.2%; the target is 18%.
Separately, the board also approved commitments of up to €50 million ($53 million) to IK Small Cap Fund IV, a small-market buyout fund managed by IK Investment Partners; and up to $50 million each to Star Lake Opportunity Fund V, a real estate fund focused on residential and industrial assets managed by J.P. Morgan Asset Management; closed-end core real estate fund TA Realty Residential Real Estate Fund and Turning Rock Fund III, a small- and middle-market North American direct lending fund managed by Turning Rock Partners.
As of Sept. 30, the pension fund’s actual allocations to alternative investments and private real assets were 11.5% and 9.3%, respectively; their respective targets are 12.5% and 10.5%
