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DTRFA Investment Managers
Metropolitan West Asset Management, Los Angeles, California S&P 500 Enhanced Index; Retained August 1998. Met West utilizes an investment strategy usually referred to as "enhanced indexing." With this strategy, Met West gains exposure to the stock market by purchasing S&P 500 futures contracts with a portion (roughly 10%) of the assets they manage. With the other portion of the assets (the other 90%), they purchase intermediate-term U.S. treasuries, mortgages and corporate bonds to generate additional income sufficient to cover the cost of the futures contracts (a rate known as LIBOR, which is similar to a money market rate) and provide an additional return above that realized from the futures contracts. With this strategy, the Met West portfolio is expected to outperform the S&P 500 index by 0.5% to 1.0% over the long-term. The DTRFA investment allocation to domestic large cap equities is targeted at 25%, with a range of 20% to 30%.
Disciplined Growth Investors, Minneapolis, Minnesota Small Capitalization Growth Equities; Retained May 1993. Disciplined Growth Investors (DGI) is a small capitalization growth manager. The DTRFA investment allocation to small cap equities is targeted at 13%, with a range of 8% to 18%. DGI typically purchases stocks of companies that are relatively new, small and growing. DGI concentrates on companies with high earnings growth potential. The portfolio has typically been heavily invested in technology. The DGI portfolio manager is Fred Martin.
Artio Global Investors, New York, NY International Equities; Retained November 2004. Artio Global Investors is the DTRFA international equity manager. The DTRFA investment allocation to international equities is targeted at 15%, with a range of 10% to 20%. The DTRFA invests in a commingled vehicle at Artio Global Investors – the International Equity Group Trust Fund. Artio Global Investors buys stocks of non-U.S. companies that are located primarily in Europe and Pacific Rim such as Japan and Hong Kong. They also have discretion to invest up to 20% of the assets in small cap and 20% in emerging market equities.
Wellington Management Company, Boston, MA Small and Mid Cap Value Equities; Retained October 2001. Wellington invests in small and mid cap (sometimes referred to as SMID) value equities. As a value investor, Wellington typically looks for well established companies that have experienced temporary decline in the price of the stock, relative to the book value and future earnings potential of the company. Purchases will typically be made in stocks of companies with lower price-to-earnings ratios than the stocks purchased by the growth stock managers. The investment allocation to this area is targeted at 10% with a range of 5% to 15%.
Western Asset Management, Pasadena, California Fixed Income Securities; Retained July 1995. Western invests only in fixed income securities - bonds - for the DTRFA. They purchase a variety of fixed income securities - US treasuries, government agency securities, corporate bonds, mortgage bonds. Western is allowed to buy primarily high-grade securities, but may purchase a limited amount of high-yield securities when they determine the opportunity is right. They may also hold a small percentage of the portfolio in non-U.S. international bonds. The DTRFA investment allocation to fixed income securities is targeted at 23% with a range of 20% to 50%.
Wellington Management Company (Boston, MA) Real Asset Strategies; Retained October 2005 Our relationship with Wellington was expanded in October 2005 to allow them to invest a small portion of the pension fund in “real asset” strategies. The portfolio is structured to provide long-term returns in excess of CPI, with strong relative performance in rising inflation environments. The portfolio is invested in several ways, including the purchase of: stocks of energy companies, metal & mining companies, companies associated with agriculture, livestock & forest products, and large cap real estate companies; inflation protected bonds; commodity linked derivative instruments.
The DTRFA investment allocation to real asset strategies is targeted at 5% of the total fund, with a range of 0% to 10%.
HarbourVest Partners
(Boston, MA) & Private Equity Investments, Retained September, 2006 HarbourVest and Piper Jaffray are retained to invest a small portion of the pension fund in private equities – equities that are not traded on a public market or exchange. The investments with these two firms are structured to provide relatively high long-term returns. The assets are invested in venture funds, buyout funds, and international private equity funds.
The DTRFA investment allocation to private equity is targeted at 5% of the total fund, with a range of 0% to 10%.
Jeffrey Slocum & Associates, Minneapolis, Minnesota Slocum is the investment consultant for the DTRFA. As a consultant, Slocum does not invest any funds for the Association. Instead, they assist in the development and organization of the overall investment program for the DTRFA. The consultant's responsibilities include the development and maintenance of the DTRFA investment policy, determination of asset allocation of the assets under management, monitoring the performance of each of the investment managers, assisting in the selection of new investment management firms when necessary. Slocum was retained by the DTRFA in 1990.
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