Pennsylvania Municipal Retirement System, Harrisburg, hired five equity and fixed-income managers to run a total of up to $1.52 billion in passive portfolios.
The $3.3 billion pension fund's board voted to hire the managers at its May 20 meeting, following a decision to move 45% of its portfolio to passive investments, a news release on its website shows.
The board approved hiring Mellon Investments to run up to $400 million to passive core fixed income, State Street Global Advisors to run up to $335 million in passive international equities, Northern Trust Asset Management to run up to $300 million in passive domestic large-cap equities and up to $130 million in passive domestic smidcap equities, Xponance to run up to $300 million in passive domestic large-cap equities and RhumbLineAdvisers to run up to $170 million in passive global minimum volatility equities.
"The shift of investments from active to passive management is in accordance with the agency's continued steps to reflect a modernized investment philosophy reflective of the industry," the news release said. "This change results in millions of dollars in savings due to lower investment manager fees."
SSGA is currently the sole passive manager for the pension fund. As of May 31, according to the pension fund's most recent available investment report, SSGA ran $574 million in passive core domestic fixed income, $160 million in passive international equities, $114 million in passive domestic small-cap equities and $107 million in passive domestic large-cap equities.
The news release did not say which active managers would be terminated or how much their portfolios would be reduced.
According to the pension fund's most recent investment report, as of May 31, the pension fund's active managers, investment styles and portfolio sizes, were:
- Polen Capital Management, domestic large-cap growth equities, $273 million.
- Eagle Asset Management, domestic large-cap equities, $208 million.
- LSV Asset Management, domestic large-cap value equities, $206 million and domestic small-cap value, $96 million.
- Hardman Johnston Global Advisors, international equities, $167 million.
- HGK Asset Management, international equities, $158 million.
- Smith, Graham & Co., domestic small-cap value equities, $110 million.
- Emerald Advisors, domestic small-cap growth equities, $99 million.
- William Blair & Co., domestic large-cap growth equities, $70 million.
- Copeland Capital Management, domestic small-cap growth equities, $58 million.
- AMI Asset Management, domestic small-cap growth equities, $50 million.
Investment consultant Marquette Associates assisted.
Spokeswoman Morgan Dux could not be immediately reached for further information.