Once selected, the manager would oversee approximately 5% of the System’s $5.3 billion Fixed Income portfolio, according to the announcement. TRS currently has some limited investments in TIPS but would like to increase its exposure as a safeguard against possible inflation in the future, according to the announcement.
“TIPS and global inflation-linked bonds have been very successful investments over the long term and are an important vehicle to position the TRS portfolio for potential inflationary markets,” said Stan Rupnik, acting executive director / chief investment officer of TRS.
In other action taken at the Board’s December meeting, the Trustees approved changes in the allocation of TRS assets to certain investment managers as recommended by the annual review of the System’s $7.03 billion International Equity portfolio.
The TRS Board voted to:
- Raise the allocation from 1% to 2% in the Passive Small Cap account currently managed by State Street Global Advisors of Boston, Massachusetts. At present, $123.7 million is invested in the account.
- Raise the allocation to Northern Trust WorldxUS from 19.25% to 25% of the Large Cap Core Passive Portfolio. Northern Trust Global Investments in Chicago currently manages $395.9 million in that account.
- Raise the allocation to Aberdeen EAFE Plus from 5.75% to 7.5% in the Large Cap Core Active portfolio. Aberdeen Asset Management, of Edinburgh, Scotland, currently manages $396.2 million in that portfolio.
- Reduce the allocation to Brandes Investment Partners from 15% to 10% in the Large Cap Value portfolio. Brandes, of San Diego, California, manages $975.6 million in TRS assets in that portfolio.
- Reduce the allocation to Mondrian Investment Partners from 15% to 10% in the Large Cap Value portfolio. Mondrian, of London, England, manages $1.05 billion in assets in that portfolio.
- Reduce the allocation to McKinley Capital Management from 15% to 10% in the Large Cap Growth portfolio. McKinley, of Anchorage, Alaska, manages $962.8 million in assets in that portfolio.
- Eliminate the temporary 5% passive allocation in the Large Cap Growth portfolio. That account, with $404.9 million, is managed by State Street Global Advisors.
- Eliminate the temporary 2% passive allocation in the Large Cap Core portfolio, a portfolio that, with $148.2 million in assets, is managed by BlackRock, Inc. of New York, New York.
The TRS board also approved allocation changes to certain investment managers as recommended by the annual review of the System’s $3.44 billion Real Return portfolio. The Trustees voted to:
- Increase the target allocation of TRS assets from 2.5% to 5% in the Global Inflation Linked Bond portfolio for New Century Advisors, of Bethesda, Maryland. New Century currently manages $74.2 million in the account.
- Increase the target allocation from 10.75% to 19% in the Global Inflation-Linked Bond portfolio for Pacific Investment Management Company, of Newport Beach, California. PIMCO currently manages $392.4 million in the account.
- Approved an investment of up to $100 million in TRS assets from the Private Equity portfolio to Morgan Creek Partners Asia, part of Morgan Creek Capital Management, of Chapel Hill, North Carolina. The firm invests in companies that do business in the growing economies of China, Singapore, India, Indonesia, South Korea, Malaysia, Thailand, Vietnam, Japan, Australia and New Zealand.
- Approved an investment of up to $75 million in TRS assets from the Private Equity portfolio to EnerVest Institutional Fund XII-A, which is sponsored by EnerVest, Ltd. of Houston, Texas. TRS notes that the focus of EnerVest’s business activity is in the exploration and production of oil and gas reserves in North America.
- Allocate an unassigned 2.5% of the $5.3 billion Fixed Income portfolio to Franklin Advisors for investment in local market and emerging market bonds. Franklin, of Rancho Cordova, California, currently manages $786.4 million in TRS International Fixed Income assets.
The Teachers’ Retirement System of the State of Illinois is the 86th largest pension system in the world, and provides retirement, disability and survivor benefits to teachers, administrators and other public school personnel employed outside of Chicago. The System serves 365,000 members and had assets of $33.194 billion as of September 30, 2010.
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