Nebraska Investment Council, Lincoln, has hired Northern Trust Asset Management to manage a portion of its passive equity exposure, Michael Walden-Newman, state investment officer, said in an email.
The council, which oversees $38.1 billion, at its Sept. 7 meeting hired Northern Trust to manage 17.75 percentage points of the U.S. equity portfolio for several of its plans: its five defined benefit plans, which have a total of $15.9 billion in assets, its cash balance benefit plans totaling $2.8 billion and the $1.5 billion Omaha School Employees Retirement System.
Those plans have a 24% target for U.S. equity and an 11.5% target for ex-U.S. equity, according to board documents. BlackRock has managed all 35.5 percentage points of the portfolio, but after 18 months of study on manager diversification in its passive exposure, the council decided to add Northern Trust to its lineup, Walden-Newman said. BlackRock will continue to manage the remaining 6 percentage points in the U.S. equity portfolio and the 11.5 percentage points in ex-U.S. equity, giving each firm 17.75 percentage points and about $3.6 billion in passive equity to manage.
Northern Trust's hiring is subject to completion of a legal review and satisfactory agreement of terms, Walden-Newman added.
Separately at its Sept. 7 meeting, the council approved a new proxy voting policy. In June the council voted to take back proxy voting from its external managers and has since signed a contract with Glass Lewis to provide proxy services for its active investments, and with BlackRock to vote Nebraska's shares based on the same Glass Lewis policy, Walden-Newman said.
Of note, the council's new proxy voting policy says it "shall contain only those factors that relate to enhancing or protecting the long-term economic value of each investment, and shall not contain factors that are prohibited by state or federal law."
And lastly, the council directed Walden-Newman and the state treasurer to hire Northern Trust as its custodian bank. The contract with State Street, the state's current custodian, expires in August 2024, so a search process was launched earlier this year. Northern Trust's approval is subject to completion of a legal review and satisfactory agreement of terms, Walden-Newman said.
