Home > News > Corporate Moves > Illinois Teachers’ Names New Leader for Emerging Manager Program

Corporate MovesJuly 11, 2019

Illinois Teachers’ Names New Leader for Emerging Manager Program

‘Invaluable’ Jose Gonzalez succeeds Kirk Sims, who left for the Texas Teachers’ Retirement System.

Jose Gonzalez

The Illinois Teachers’ Retirement System has promoted Jose Gonzalez to lead its $750 million emerging manager program.

Established in 2005, the emerging manager program identifies and seeds fledgling money managers, which pension funds such as the Texas Employees Retirement System have been working on in the past several years. The Illinois Teachers’ division currently has 18 firms that manage a combined $500.6 million across all asset classes.

“My goal is to help these emerging firms create a win-win situation,” Gonzalez said. “They can help TRS enhance its portfolio on behalf of our members, and we can help them grow and prosper in the marketplace.”

Many of the program’s managers are women and minority-owned businesses, the fund said. Last year, $20.7 billion, or 20% of the retirement system’s assets were managed by women and minority-owned firms, according to a news release.

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“We have a strong commitment to diverse and emerging managers, especially minority, women, disabled, and veteran-owned firms,” said Executive Director Dick Ingram, who called Gonzalez’ experience “invaluable” to the organization.

Gonzalez replaces Kirk Sims, who left the fund in February to run the Texas Teachers’ Retirement System’s emerging manager program.

Gonzalez has been with the $51.1 billion fund since 2015 as a senior analyst for global bonds and real assets, his LinkedIn profile shows. He had previously been director of investments and e-pay operations for the Illinois State Treasurer.

“He understand[s] the capabilities and needs of emerging managers and how they can best fit into our investment strategy,” Illinois Teachers’ Chief Investment Officer Stan Rupnik said.

Tags: Emerging Managers, Illinois, Illinois Teachers’ Retirement System, Joe Gonzalez, Pension

Home > News > Manager Selection > LACERS Bounces Large Cap Manager AJO

Manager Selection July 11, 2019

LACERS Bounces Large Cap Manager AJO

Performance has lagged for many years.

By Chris Butera

The Los Angeles City Employees’ Retirement System has terminated a large cap US equities manager, according to board meeting materials.

The $17.3 billion fund ended its contract with AJO due to performance issues, according to June documents. The manager, which had worked for the organization since 2001, had been placed “on-watch” since June 30, 2016. The current contract was set to end in October, but the pension plan decided to cut its losses early.

“As detailed in the performance section of the report, AJO’s overall relative performance has not improved through the approximate three-year watch period and continues to breach policy criteria,” the materials said.

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Source: LACERS

AJO, which is benchmarked against the Russell 1000 Value Index, trailed nearly every year since the organization first hired it. It has outperformed the benchmark by only 20 basis points since inception.

AJO, which runs active quant strategies, managed $183 million of the plan’s assets as of April 30. It manages $21 billion in total client assets. Key personnel, strategies, philosophies, and process never changed during its contract with the Los Angeles fund.

The pension program’s AJO-managed assets will be transferred to a passive S&P 500 portfolio run by RhumbLine Advisers. That firm managed $3.2 billion as of March 31.

RhumbLine is also far cheaper than AJO as its annual passive fees for LACERS will be 0.5 basis points of the fund’s assets as of April 30, or $9,150. LACERS was paying AJO 30 basis points, or $549,000 per year.

AJO’s removal is in line with the fund’s “widely accepted view that US large-cap equity exposure should be implemented with passive management,” materials show.

Neither LACERS nor AJO could be reached for comment.

Tags: AJO, Asset Management, LACERS, Los Angeles City Employees’ Retirement System, Pension

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