Massachusetts pension board fires five managers

The Massachusetts pension board fired five managers, including Legg Mason Capital Management.
AUG 07, 2008
The Massachusetts Pension Reserves Investment Management Board fired five managers , including Legg Mason Capital Management, a subsidiary of Legg Mason Inc. of Baltimore, for inconsistent performances and high-tracking errors. Others fired were Gardner Lewis Asset Management Inc of Chadds Ford, Pa.; NWQ Investment Management Co. LLC of Los Angeles; Mazama Capital Management Inc. of Portland, Ore.; and Ariel Investments LLC of Milwaukee. The PRIM fund began the calendar year with $53.7 billion. But, as of June 30, it had $50.6 billion in assets under management. The board ousted the five managers following a report from staff and Cliffwater LLC, a consultant based in Marina del Rey, Calif., which noted that for the past five years the actively-managed portfolio managers have not exceeded their respective benchmarks. As of May 31, PRIM had returns of -4.27% year to date, -9.17% for one-year trailing, 7.31% for three-year, 10.36% for five-year and 5.30% for 10-year. These returns compared to the benchmark of -3.07% for the year to date, -6.35% for one-year, 8.31% for three-year, 10.88% for five-year, and 4.82% for 10-year. The terminated managers had total assets of $2 billion as of June 30.The assets of these managers will be transferred to the Russell 3000 Index portfolio managed by State Street Global Advisors of Boston and also be used to fund the 1% allocation to a new portable alpha fund of hedge fund managers. The remaining active managers are INTECH of Palm Beach Gardens, Fla.; Pimco Funds of Newport Beach, Calif.; Axa Rosenberg Investment Management LLC of Orinda, Calif.; Earnest Partners LLC of Atlanta; Putnam Investments of Boston and Numeric Investors LP of Boston.

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