Shake up at US fund sees Rogge lose e611m mandate
US- A complete overhaul of asset allocation at the Illinois teachers’ retirement system (TRS) has thrown two mandates out to tender and led the fund to drop Rogge Global Partners from a $594m (e611m) international fixed income mandate.
Following the appointment of Charles Self as chief investment officer and the election of Callan Associates as investment consultant last December, TRS has been reviewing each of the asset classes comprising its $22bn (e22.6bn) scheme.
In April the board voted to reduce its international equity allocation from 20% to 15%, and this month decided to trim its allocation to fixed income from 36% to 23%.
Greater focus is to be placed on US equity, real estate and private equity, which will account for 41%, 14% and 6% of assets respectively. The remaining 1% will be invested in short-term products.
Changes in the asset class structure has resulted in each of the six current managers of the international equity funds seeing reductions to their portfolios. State Street, Capital Guardian, Invesco, Martin Currie, Brandes and Delaware are all affected.
Rogge Global partners also loses its $594m fixed income brief although John Day, assistant executive director at TRS, stressed poor performance played no part in the decision.
Beneficiaries include managers of domestic equity funds including Oak Associates, Dodge 7 Cox, Earnest Partners, NorthPointe Capital, Neuberger Berman and State Street which all see increases in they amount they manage for the fund.
New domestic equity mandates totalling $390m have been awarded to Advisory Research, Great Lakes Advisory and MFS Investment Management.
Alliance Bernstein Institutional Investment Management, which runs TRS’s $780m large cap value domestic equity portfolio, has been placed on a watch list because of legal proceedings involving Enron.
The two new equity mandates out to tender include a $495m return-focused brief, and a $300m emerging markets mandate. TRS, which hopes to fill make the appointments by December, says it will only consider managers that appear on Callan’s database.
In the bid to expand its commitment to private equity, Day estimates that an extra $400m (e411m) will be committed to this area each year for the foreseeable future. TRS currently has $1.4bn (e1.44bn) invested in this sector. As part of the expansion, TRS has appointed Carlyle Venture Partners II to run a $150m (e154m) fund investing in technology infrastructure companies.