Pension Fund Evaluations, Inc. would generally recommend the hiring of a new investment manager under the following conditions:
• To further diversify the portfolio with regard to market cap and style.
• Retaining investment managers on a mature plan to better match liabilities with assets.
• Replacement of an existing manager who consistently underperforms their benchmark.
Procedure for retention of a new investment manager:
• PFE reviews firms with a minimum of $700 million under management, minimum of at least three years in business, historical returns versus benchmarks, management team experience.
• Initially Investment Managers are screened to about 30 candidates; a second review is conducted, whereby candidates are narrowed down to 5-10, of which 3-4 are chosen for final presentations.
• Managers are funded after contracts have been reviewed by Counsel and administrative issues are concluded
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