Key Takeaways
- • The Texas Employees' Retirement System (ERS) selected NEPC as its new general investment consultant, ending an almost decade-long relationship with Aon Hewitt, which had served the system since 2009.
- • NEPC begins its engagement with ERS on January 1, following a competitive tender process launched on July 6, 2018.
- • Six firms made official submissions (Aon Hewitt, NEPC, Meketa Investment Group, Pension Consulting Alliance, RVK, and Verus Advisory) after more than 30 firms requested access; the field was shortlisted to Aon Hewitt, NEPC, and Verus Advisory.
- • ERS also hired CBRE Caledon as its infrastructure private equity consultant, replacing Pavilion Alternatives Group, which had advised the system since August 2007.
Summary
The Texas Employees' Retirement System (ERS) has hired NEPC as its new general investment consultant, replacing Aon Hewitt, according to ai-cio.com. Aon Hewitt had provided general investment consultancy services to the ERS since 2009. The system's investment committee voted to make the appointment following a competitive tender process launched on July 6.
The request for proposal assigned the selected consultant several key responsibilities, including asset allocation and asset liability modeling, review and evaluation of the trust's portfolio, policy review, and manager advisory services. More than 30 unique firms requested access to the solicitation, and six submitted official proposals by the deadline: Aon Hewitt, NEPC, Meketa Investment Group, Pension Consulting Alliance, RVK, and Verus Advisory. After grading respondents on qualifications, price, methodology, and other criteria, the retirement system shortlisted Aon Hewitt, NEPC, and Verus Advisory.
Deputy Chief Investment Officer Sharmila Kassan cited NEPC's approach to asset allocation, the resources it could combine with its firm, the team it proposed, and the opportunity for new insight as the reasons for the decision. Kassan noted that the finalists were closely scored, saying "I think any of the finalist were just fine." NEPC will begin work with the ERS on January 1.
In a separate mandate, the ERS hired CBRE Caledon as its infrastructure private equity consultant, replacing Pavilion Alternatives Group. Pavilion had served as the ERS's private equity consultant since August 2007, and its contract was amended in August 2013 to add infrastructure-related services. CBRE Caledon will assist in analyzing and assessing funds, co-investments and infrastructure investments, monitor portfolio performance against the designated benchmark, and support periodic reviews of existing infrastructure policies and benchmarks. Albourne America, Pension Consulting Alliance, StepStone Group Real Assets, Hamilton Lane Advisors, Townsend Holdings, Meketa Investment Group, and Pavilion Alternatives Group bid for the infrastructure contract.
The request for proposal assigned the selected consultant several key responsibilities, including asset allocation and asset liability modeling, review and evaluation of the trust's portfolio, policy review, and manager advisory services. More than 30 unique firms requested access to the solicitation, and six submitted official proposals by the deadline: Aon Hewitt, NEPC, Meketa Investment Group, Pension Consulting Alliance, RVK, and Verus Advisory. After grading respondents on qualifications, price, methodology, and other criteria, the retirement system shortlisted Aon Hewitt, NEPC, and Verus Advisory.
Deputy Chief Investment Officer Sharmila Kassan cited NEPC's approach to asset allocation, the resources it could combine with its firm, the team it proposed, and the opportunity for new insight as the reasons for the decision. Kassan noted that the finalists were closely scored, saying "I think any of the finalist were just fine." NEPC will begin work with the ERS on January 1.
In a separate mandate, the ERS hired CBRE Caledon as its infrastructure private equity consultant, replacing Pavilion Alternatives Group. Pavilion had served as the ERS's private equity consultant since August 2007, and its contract was amended in August 2013 to add infrastructure-related services. CBRE Caledon will assist in analyzing and assessing funds, co-investments and infrastructure investments, monitor portfolio performance against the designated benchmark, and support periodic reviews of existing infrastructure policies and benchmarks. Albourne America, Pension Consulting Alliance, StepStone Group Real Assets, Hamilton Lane Advisors, Townsend Holdings, Meketa Investment Group, and Pavilion Alternatives Group bid for the infrastructure contract.
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