Updated with clarification.
Investment staff of the $52.2 billion Illinois Teachers' Retirement System, Springfield, invested or committed a total of $1.25 billion to six new and existing managers from March 30 to July 15, a report presented to the fund's board of trustees at a meeting Friday showed.
Existing manager Rhumbline Advisers was awarded $400 million for investment in a large-cap U.S. equity factor-based investment strategy from the $8.3 billion U.S. equity portfolio. Rhumbline managed a total of $4.5 billion in passively managed assets as of June 30 prior to the new investment.
Manager Adrian Lee & Partners was terminated from management of a nominal $500 million passive currency overlay program for the fund's $9.6 billion international equity portfolio. The reason for the termination was not provided.
From TRS' $520 million real assets portfolio, existing manager Carlyle Group received a $200 million commitment to Carlyle Global Infrastructure Opportunity Fund. Carlyle managed $112 million in opportunistic real estate funds for the teachers' fund prior to the new commitment.
TRS committed $300 million to core real estate fund Oak Street Real Estate Capital Net Lease Property Fund from the $6 billion core/value-added real estate portfolio. Oak Street is an existing manager that recently was graduated from TRS' $549 million emerging manager program to full portfolio manager status.
New manager Kirkoswald Capital Partners received an investment of $200 million in its global macro fund from the defined benefit plan's $5.5 billion diversifying strategies portfolio, which includes hedge funds, alternative risk premium strategies, risk parity, and systematic and discretionary macro funds.
Also from the diversifying strategies portfolio, TRS reduced its allocation to KeyQuant's Key Trends 15 systematic macro fund by $40 million, leaving $75 million in the strategy within the diversifying strategies portfolio. R. Stanley Rupnik, the fund's chief investment officer, told trustees that the reduction was part of rebalancing the portfolio because the manager had produced strong performance.
From the same portfolio, the fund's investment staff terminated activist investor Cevian Capital to liquidate a remnant $13 million investment made much earlier through a hedge funds-of-funds manager.
Penso Advisors was terminated from a $96 million discretionary global macro investment. The reason for the termination was not provided.
From the defined benefit plan's $6.9 billion private equity portfolio, $75 million each was committed to two middle-market buyout funds managed by new managers — Arlington Capital Partners V and Aurora Capital Partners VI.
Separately, during the board meeting, trustees approved the tactical pacing plan for investment within the fund's real estate and real assets portfolios, as presented by Timothy Hays, senior investment officer.
As of June 30, the fund's combined core/value-added and opportunistic real estate portfolios totaled about $7.3 billion and real assets totaled $520 million. As part of the fiscal-year 2020 tactical plan, the $1.3 billion opportunistic real estate portfolio will move into a single portfolio with the core/value-added portfolio. Previously, the opportunistic property fund was part of the fund's equity asset class.
The pacing plan for the current fiscal year ended June 30, 2020, will commit up to $1.16 billion in real estate and real assets funds, with $575 million earmarked for infrastructure and other real assets; up to $500 million to opportunistic real estate; and zero to core/value-added real estate.
To reach the fund's long-term target allocations from total plan assets of 11% to core/value added real estate, 5% to opportunistic real estate and 4% to real assets by the June 30, 2024, fiscal-year end, Mr. Hays and his staff will commit as much as $600 million a year over the four-year period to real estate strategies and up to $575 million a year to real assets.
In addition, Illinois Teachers plans to post an RFP on Aug. 15 for a defined contribution plan record keeper for the new defined contribution plan mandated by Illinois legislation, Carlton Lenoire, chief benefits officer, told trustees during the meeting.
Final candidates will be selected by staff in November and will be considered by the board of trustees at its Dec. 10 meeting.
Mr. Carlton and his staff also will present the investment lineup for the new 457(b) plan at the same meeting.
TRS plans to roll out the new DC plan on July 1, 2020.
