| NEW YORK, April 5
NEW YORK, April 5 A California pension fund has
fired Franklin Templeton Investments, JPMorgan Chase &
Co and Pacific Investment Management Co from
some portfolio-management responsibilities in a shakeup that
puts more of its assets in lower-fee, index-tracking
investments, the fund said.
The Orange County Employees Retirement System (OCERS) is the
latest institutional investor to scrap some of its active
managers, stemming from a consultant's recommendation to avoid
high fees and subpar performance in its $14.1 billion investment
portfolio, according to a notice posted online this week.
Last year, active mutual funds lost $343 billion to
withdrawals. Billionaire investor Warren Buffett earlier this
year said most investors are better off buying index funds.
The retirement system based in Santa Ana, California,
decided to move more than $1 billion of assets from the managers
late in March, the notice said.
Parts of the portfolio managed by Grantham Mayo Van Otterloo
& CO LLC and Standard Life PLC are also being liquidated.
Franklin Templeton and Standard Life did not respond to
requests for comment, while the other fund companies declined to
The changes were reported earlier Wednesday by FundFire, an
industry news service.
Half a trillion dollars moved into index funds last year,
according to Morningstar Inc, the seventh straight year they
have outpaced counterparts whose managers try to pick winners
and losers in the market. Those figures do not include privately
managed institutional accounts.
The California retirement system's investment consultant,
Meketa Investment Group Inc, told the pension plan it could save
at least $9 million a year, excluding performance fees, by
cutting some managers and transferring some of the funds to
Meketa advised cutting equity strategies run by Franklin,
GMO and JPMorgan for "historical underperformance" and "expected
performance challenges relative to passive exposure going
And it said cutting funds such as the Pimco All Asset All
Authority Fund and the Standard Life Investments
Global Absolute Return Fund could also help save fees.
Marc Seidner, Pimco's chief investment officer for
"Non-traditional Strategies," and Robert Arnott, who manages the
All-Asset fund, are slated to speak to an OCERS committee on
Thursday, according to an agenda posted online.
The pension fund has cut hedge funds as a separate
investment category, but has kept some hedge funds in its
portfolio, including products run by Pimco, D. E. Shaw & Co LP
and Bridgewater Associates LP.
(Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and