Illinois Teachers assigns $650 million to managers

Retirement system also seeks recruitment firm to search for new executive director

Illinois Teachers’ Retirement System, Springfield, invested or committed a total of $650 million to new and existing managers, along with terminations and partial redemptions from existing managers totaling $599 million.

The investment staff of the $52.9 billion pension fund, which has investment discretion, disclosed the managers they had hired to trustees during an investment committee meeting conducted remotely Thursday.

From the pension fund’s $8.1 billion real assets portfolio, a total of $450 million was committed to two infrastructure managers, with $250 million slated for Stonepeak Infrastructure Fund IV. Stonepeak Infrastructure Partners is a new manager for the retirement system. Existing manager Macquarie Infrastructure and Real Assets was awarded $200 million for investment in Macquarie Infrastructure Partners V. Macquarie currently manages $48 million for TRS.

Three fixed-income managers shared a total of $150 million in commitments.

From the pension plan’s $14.4 billion global income portfolio, two managers received additional contributions to existing funds. Apollo Global Management received an additional $75 million for investment in Apollo Lincoln Fixed Income Fund, a separately managed account. TRS’ original commitment to the Apollo fund in 2014 was $250 million. Apollo currently manages a total of $528 million for the defined benefit plan. Taurus Funds Management was given an additional $25 million commitment to Taurus Mining Finance Fund II. The original commitment to the fund in 2019 was $100 million. Taurus currently manages $106 million for TRS.

Fixed-income manager TerraCotta Group, a new manager for TRS, received a $50 million commitment from the retirement system’s $675 million emerging managers program for investment in TerraCotta Credit Fund.

Stellex Capital Management, a new private equity manager for the system, also was funded from TRS’ emerging managers program with a $50 million commitment for investment in Stellex Capital Partners II, a middle-market buyout fund.

TRS terminated AQR Capital Management from running $481 million in a U.S. large-cap core equity strategy from the pension fund’s $17 billion public equity portfolio. TRS also terminated AQR for management of $58 million in the firm’s Global Risk Premium Tactical Master Account from the retirement system’s $5.6 billion diversifying strategies portfolio, which includes factor-based, risk-premium and systematic and discretionary macro hedge funds. AQR continues to manage $1.4 billion in various strategies for the pension fund.

Northern Trust Asset Management was terminated from management of a $60 million emerging markets large-cap equity strategy. Northern Trust continues to manage $2.4 billion for the retirement system.

R. Stanley Rupnik, TRS’ CIO and interim executive director, did not provide explanations for the terminations during Thursday’s investment committee meeting.

During a board meeting conducted remotely Friday, trustees approved an RFP for an executive recruitment firm to search for a new executive director and set up a committee to handle the search process.

The retirement system’s previous executive director, Richard Ingram, resigned July 31 after being placed on administrative leave by the board due to performance concerns.

Devon Bruce, president of TRS’ board, stressed to other trustees during the meeting that “this will be a national, transparent, robust, best-practices search that every board member will be involved in. This will be one of the most significant tasks we will undertake as trustees.”

The timing for the RFP’s release has not been set, said David Urbanek, TRS’ spokesman, in an email.

The board also learned from the TRS staff that the rollout of the retirement system’s new defined contribution plan likely will be delayed from its planned Jan. 11, 2021, launch date because of computer system issues.

Board members asked staff to engage an external company to audit the new DC plan systems. An RFP is planned, but the timing was not set during the meeting.

Regarding the pension plan’s performance for the fiscal year ended June 30, Mr. Rupnik said about one-third of the retirement system’s private market managers have not yet provided their performance to TRS and told trustees that the pension fund’s preliminary net return was 0.5% vs. 5.5% for the benchmark.

Final fiscal-year returns for the pension fund generally are presented at the board’s October meeting.