Louisiana Municipal Police Employees Retirement System, Baton Rouge, hired Mellon Investments to run $143 million in two passive equity portfolios.
The $2.2 billion pension fund hired Mellon to run $82 million in passive domestic small-cap equities and $61 million in passive emerging markets equities, said Benjamin Huxen II, executive director and general counsel, in an email.
Funding for the respective portfolios comes from the terminations of Pinnacle Associates from an active domestic smidcap equity portfolio and Dimensional Fund Advisors from an active emerging markets equity portfolio.
Mr. Huxen said the pension fund terminated the active managers to save on fees, and also because Pinnacle's strategy was performing more like a value strategy, which didn't "mesh well with the rest of our portfolio." He also said the pension fund did not like Dimensional's strategy relying "on only one factor."
He added the reallocations to passive strategies is not a temporary measure.
As of Sept. 30, the actual allocations to domestic equities and emerging markets equities were 25.4% and 7.3%, respectively. Their respective targets are 24% and 7.5%.
Investment consultant NEPC assisted.
