By Muskan Arora
The $4 billion Seattle City Employees Retirement
System has shortlisted NEPC, Verus, RVK and Meketa as the finalists for their
investment consultant search.
The system will make the final selection after the
approval of the board at the May meeting.
“Jason [Malinowski] and Leola [Ross] will be doing site visits and
operational due diligence of the shortlisted firms with the goal of coming back
to the May meeting with two to three finalists for the board to approve,” said
the investment committee at last week’s board meeting.
The new consultant will have a ninety-day trial
period.
NEPC, the current investment consultant, completes
their five-year contract on June 30.
The Request
for Proposal, released on January 17, highlighted the minimum
criteria, scope of work and licensing among other important requirements.
Requirements
The document stated that the firm should be a
registered investment advisor with the Securities and Exchange Commission,
alongside being in the business for five years, and having at least three U.S
public defined benefit pension plan clients.
The new consultant will be required to provide
investment policy consultation, asset-liability modelling, and structuring,
sourcing managers, formulating performance reports, education and training for
the board, alongside investment operational consultation.
To stay on top of the ESG requirements, the CIO
included a separate questionnaire for ESG which includes diversity and gender
disclosures and an in-depth analysis of the ESG practices of the firm.
What now?
As SCRES has
chosen four firms out of the seven who responded to the RFP, the investment
board will now begin their due diligence process and may “contact one or more
references” including those not named by the firm.
After another
evaluation, the system will interview the finalists who are invited to bring
the primary consultant or “may bring other key personnel named in the
proposal”.
SCERS
Portfolio
As of Dec 31, the system allocates 44.9% or $1.76
billion to the public equity sleeve against a target of 46% or $1.84 billion
within the equity bucket.
Of that same bucket, the system allocates 13.3% or
$532 million to the private equity sleeve against a target of 11% or $440 million.
In the fixed income sleeve, Seattle has 15.6% or $624
million allocated to the core fixed income sleeve against a target of 14% or
$560 million.
Within the fixed income sleeve, 4.9% or $196 million
is allocated to the long-term fixed income sleeve against a target of 5% or
$200 million.
Credit fixed income has 6.7% or $268 million
allocation against a target of 7% or $280 million.
Under the real assets bucket, the system allocates
11.3% or $452 million to the real estate sleeve against a target of 12% or $480
million.
The system allocates 2.7% or $108 million to their
infrastructure sleeve, within the real estate bucket, against a target of 5% or
$200 million.
The board will next meet on May 9.