The board chose mostly new firms.
Following an executive session when each of the board members justified their choices, Chairman Sixto Igisomar asked them to reveal the names of the companies they selected.
These new managers, according to the board, will meet the mandates under the asset allocation recommended by investment consultant Wilshire and Associates.
The revised asset allocation, the board said, “tilts” the overall investment strategy toward the preservation of capital rather than growth of assets considering the “shortened” life of the Fund.
The money managers were selected from a large pool of firms that responded to the Fund’s request for proposal.
All the proposals were analyzed and compared thoroughly, the board said.
Last March, the top candidates in each of the investment categories were interviewed by the board and Wilshire in the Fund’s conference room. Management fees were one of the criteria.
BNY Mellon of San Francisco, California, a merger of Bank of New York and Mellon Capital, was selected as passive or index manager for index fund allocations particularly U.S. equities: Russell 1000 Index; non-U.S. equities: MSCI ACWI Index and Short-Term Bond Index.
Franklin International Small Cap, which has $587 million of assets under management in the product line the Fund will be investing in, was selected to manage the non-U.S. equities-small cap allocation.
Cohen & Steers Capital Management will manage Global Real Estate securities. The benchmark for this allocation, the board said, holds approximately 40 percent in U.S. property companies, 40 percent in Asian property companies, and 20 percent in European property companies.
Pacific Investment Management Co., or PIMCO, which was founded in Newport Beach, California and later acquired by a German headquartered global financial services company — Allianz —will manage U.S. Intermediate Bonds: Core Plus and the multi-asset inflation hedge.
The multi-asset inflation hedge assets, the board said, include commodities futures/swaps, inflation linked bonds, stocks of natural resources companies and resource-related new technology such as renewable energy companies.
PIMCO’s Commodity Real Return Fund, the board added, has about $21 billion of assets under management.
Pictet Asset Management Ltd. will manage the small allocation to emerging markets debt/local currency. This allocation, the board said, seeks to participate in the more healthy debt markets to capture possible future currency appreciation of emerging markets currency. Pictet’s parent company is a Swiss wealth manager founded in 1805.
The assets under management in the product the Fund will invest in are worth $11 billion.
In order to control risk exposure and to diversify, the board selected three money managers for the equity long/short fund of funds allocation: Aetos Capital; Blackstone Alternative Asset Management, the largest hedge fund of funds manager with $1.4 billion of assets invested in the firm’s funds; and Lighthouse Investment Partners, a subsidiary of HFA Holdings, an Australian financial services company, publicly traded in Australia.
The board said in implementing the new asset allocation, existing managers that manage strategies the Fund will continue to invest in will be retained.
