Oregon Public Employees' Retirement System recently terminated its contracts with several insurance companies and hired a cadre of new fund managers to provide funds for its $600 million Oregon Savings Growth Plan (OSGP). The move is designed to save plan participants approximately one-half of a percentage point in fees, said Michael Mueller, assistant director of investments.
Managers tapped to run the plan include: State Street Global Advisors, Barclays Global Investors, Fidelity Investments, Wellington Management Co., Dodge & Cox, MFS, Van Kampen Investments, American Funds, Smith Barney, Artisan Funds, Oakmark T. Rowe Price. Several of the advisors listed also run a portion of the system's $40 billion defined benefit fund.
Mueller declined to name the insurance companies that were terminated, but did say the relationships would end Nov. 1.
A reduction in cost was driving factor for the change. The insurance companies' transaction fees were about 77 basis points in addition to an undisclosed layer of fees, he said.
Under new management the fees will be approximately 27 basis points, not including a fixed the 26.5 basis point fee required to cover record keeping and administration, according to the system's Aug. 29 board meeting minutes. "By leveraging those relationships we were able to get lower fees," Mueller said.
In other news, Oregon council members decided to sack large-cap value manager Equinox Capital Management of New York, and market orientated manager Brown Capital Management of Baltimore. ( Investment Management Weekly, 9/22/01).
Equinox under-performed the Russell 1000 Value index by 3.4% relative to a five-year track record. Brown's performance was down 4.2% when compared to the straight Russell 1000, based on a four-year record.
It is too early to determine if the system will search for replacement managers, Mueller said. But investment staffer Jay Fewel said that a replacement manager for Equinox would be presented in a subsequent meeting.