Iowa Public Employees’ Retirement System made several changes to asset class structures and hired BlackRock for a small-cap equity allocation.James Comtois
Iowa Public Employees’ Retirement System, Des Moines, made several changes to its equities and public real assets allocations, confirmed Judy Akre, spokeswoman for the $31.4 billion plan.
For domestic equities, IPERS hired BlackRock to manage $400 million in a scientific active equity U.S. small-cap strategy.
The system will also reallocate $2.1 billion to existing passive U.S. equity index funds managed by Mellon Capital Management, which now manages about $2.4 billion in that strategy.
Those moves were funded by terminating four U.S. large-cap equity strategies:
- J.P. Morgan Asset Management’s $944 million enhanced index portfolio.
- PanAgora Asset Management’s $915 million enhanced index strategy.
- Wellington Management’s $400 million value strategy.
- Columbia Threadneedle Investments’ $367 million growth portfolio.
Wellington and PanAgora were terminated for performance issues, while JPMAM and Columbia are being terminated to reduce the plan’s active risk allocation to U.S. large-cap equity. Wellington spokeswoman Sara Lou Sherman declined to comment. A spokesman for PanAgora could not be immediately reached for comment.
For international equities, IPERS’ international equities program will be restructured to a Europe, Australasia, Far East plus emerging markets structure from its current regional focus. The board plans to convert an existing $1.2 billion scientific active equity European strategy managed by BlackRock to a BlackRock-run scientific active equity EAFE mandate.
IPERS will terminate Quantitative Management Associates’ $600 million and GAM’s $234 million Pacific Basin equity strategies.
For public real assets, the pension fund also agreed to allocate an additional $730 million to an existing BlackRock passive Treasury inflation-protected securities index fund; BlackRock now runs $760 million in TIPS. Funding will come from terminating BNP Paribas Investment Partners’ active TIPS strategy.
In addition, IPERS put Wadhwani Asset Management’s $75 million liquid absolute-return strategy on watch for organizational issues due to an announced change in ownership of the firm. PGIM announced last month it would acquire the firm.
Meanwhile, Aegon Assest Management’s $400 million U.S. high-yield strategy remained flagged for organizational issues, while Oaktree Capital Management’s $380 million U.S. high-yield strategy also remained on IPERS’ watchlist for performance issues.
Next year, IPERS anticipates committing up to $200 million to existing managers in its private credit program, and up to $300 million to private real assets in 2019. IPERS’ private equity manager, Pathway Capital Management, will also be authorized to commit up to $700 million to private equity investments at Pathway’s discretion in 2019. The pension has a 12.83% allocation to private equity and 6.15% to private real assets.
The decisions were announced at the board’s Dec. 6 meeting.