Illinois TRS Walks Away From Hedge Fund Consideration

Following a preliminary search, the $31 billion fund decided against hedge fund investments.   “The action was taken because the system prefers to stand by the existing asset allocation that does not include hedge funds,” TRS said in a news release. The fund did not select finalists or conduct interviews in its brief hedge fund manager search.

That current allocation includes two money managers that were placed on the fund’s watch list and three firms that remained on the list.   Ariel Capital Management, which manages a $398 million small cap value mandate, was removed.  

New to the list are Capital Guardian and Northern Trust Global Investments.   Capital Guardian, which manages a $603 million international mandate, was placed on watch for performance reasons, while Northern Trust Global Investments, which manages a total of $1.55 billion in four passive (index) funds, was placed on watch for organizational reasons following the departure of three senior employees from its quantitative management division, the pension fund said.

Maintaining a spot on the watch list are J & W Seligman, Artisan Partners and INVESCO Global Asset Management.   J & W Seligman, which manages a $261 million small-mid cap growth mandate, remains on the watch list for performance reasons, while Artisan Partners, which manages a $389 million international equity mandate, remains on the watch list for performance and organizational reasons.

INVESCO Global Asset Management, which manages a $749 million international equity assignment, remains on the watch list for performance reasons and for organizational reasons due to pending Securities and Exchange Commission (SEC) civil enforcement actions.

The action came as part of TRS’ board meeting held on August 9 and 10 in Chicago.