Illinois TRS Hires and Fires
August 2, 2006
The board of the $36.8 billion Teachers' Retirement System of the State of Illinois (TRS) approved numerous actions at its Aug. 2 meeting, including the termination of two domestic equity managers and talks of a maiden investment in international real estate, said the plan's spokeswoman Eva Goltermann.
Great Lakes Advisors was terminated from a $162 million large-cap value account for organizational and performance issues at the firm. Holland Capital, which managed a $315 million large-cap growth account for TRS, was also terminated for the same reasons. In a statement issued by TRS, the plan said the assets from the terminated managers would be transitioned into an S&P 500 index fund managed by Rhumbline Advisors.
Goltermann said that the board immediately authorized a search for a new domestic equity large-cap value manager to replace Great Lakes. The full details of the search are expected to be released on Aug. 25. She added that the new manager would oversee the same amount as Great Lakes.
PIMCO StocksPlus was also placed on watch on its $935 million U.S. equity enhanced index account due to poor performance.
In other news, the boarding is looking into adding an international real estate manager to the plan's $4.1 billion real estate portfolio. Goltermann explained that numerous aspects of the asset class have piqued the board's interest, especially its ability to add diversification to the portfolio and to provide an opportunity for enhanced returns. She also noted its lower correlation to domestic real estate, which would add more value to the portfolio.
Goltermann said that in the coming year, TRS staff, as well as a newly selected real estate consultant (See IMW, 6/26/06), will be looking for commingled investments in international real estate.
Separately, the board approved an investment of $50 million in RLJ Lodging Fund, a hotel focused real estate fund. The investment will be funded from cash and passive/enhanced index accounts. Goltermann said that TRS staff and RLJ have been in talks for the past few months working out the investment.
The board is also in the midst of an asset allocation study, being conducted by its consultant R. V. Kuhns & Associates. R.V. Kuhns is expected to present their findings and recommendations to the board in November.
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