New Orleans Sewerage and Water Board hired six new active equity and fixed-income managers to run a total of $96 million for its $262 million pension fund.
The board’s pension committee at its Jan. 14 meeting approved hiring Loop Capital Partners to manage $60 million in active domestic core-plus fixed income, EARNEST Partners to manage $10 million in active domestic midcap equities, Channing Capital Management and Mesirow Financial to run $6 million each in active domestic small-cap equities, GQG Partners to manage $7 million in active emerging markets equities and Thompson, Siegel & Walmsley to manage $7 million in active international small-cap equities, a webcast of the meeting showed.
The hirings are the result of five requests for information issued by the board in March 2024. Ramirez Asset Management was the other core-plus fixed-income finalist, Madison Investments was the other midcap finalist, Causeway Capital Management was the other emerging markets equity finalist and Strategic Global Advisors was the other international small-cap finalist.
For small-cap equities, Channing and Mesirow were the only finalists. The Mesirow contract will be transferred to MetLife Investment Management once that firm’s acquisition of Mesirow’s small-cap equity team announced Jan. 8 is finalized, according to pension committee meeting materials.
The searches represented the latest phase in an ongoing implementation of new target allocations approved in November 2021.
The changes consisted of increases in targets for domestic equities to 34% from 27% and international equities to 21% from 20%, and the reduction of the target to fixed income to 25% from 36%. Other changes included a new 10% target allocation for private equity funds of funds and a 7% target for global infrastructure, the elimination of its 8% target for hedge funds and the reduction of real assets to 3% from 9%.
Overall changes were recommended at the time to bring the pension fund's expected 10-year annualized return up to 7.01% from 5.91%.
Funding comes from past allocation implementations. As of Nov. 30, the pension fund’s actual allocation was 41.7% domestic equities, 24.1% international equities, 22.9% fixed income, 7% global infrastructure, 3.4% real estate and 0.9% cash composite.
Investment consultant Marquette Associates assisted.
