Key Takeaways
- • The Texas Employees' Retirement System (ERS) terminated its nearly decade-long general investment consultant relationship with Aon Hewitt, which had served the system since 2009, and hired NEPC to replace it starting January 1.
- • The ERS investment committee selected NEPC after a competitive tender launched July 6, in which more than 30 firms expressed interest and six submitted proposals.
- • Deputy Chief Investment Officer Sharmila Kassan said NEPC's approach to asset allocation and its combined resources were decisive, noting the finalists' evaluation scores were very close.
- • The ERS also replaced Pavilion Alternatives Group, its private equity consultant since August 2007, with CBRE Caledon as infrastructure private equity consultant.
Summary
The Texas Employees' Retirement System (ERS) has hired NEPC as its new general investment consultant, ending an almost decade-long relationship with incumbent Aon Hewitt, which had provided general investment consultancy services to the system since 2009. The investment committee voted to make the change following a competitive tender process launched on July 6.
The request for proposals outlined responsibilities for the selected consultant 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 system shortlisted Aon Hewitt, NEPC, and Verus Advisory.
Deputy Chief Investment Officer Sharmila Kassan said the decision reflected NEPC's approach to asset allocation, the combination of its resources with the firm, the team proposed, and the opportunity to gain new insight. She added that any of the finalists would have been acceptable, as the evaluation scores were very close. NEPC will begin its engagement with the ERS on January 1.
In a separate change, 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 with analysis and assessment of funds, co-investments and infrastructure investments, monitor portfolio performance against the designated benchmark, and support periodic reviews of the ERS's infrastructure policies and benchmarks.
Bidders for the private equity and infrastructure mandate included Albourne America, Pension Consulting Alliance, StepStone Group Real Assets, Hamilton Lane Advisors, Townsend Holdings, Meketa Investment Group, and Pavilion Alternatives Group.
The request for proposals outlined responsibilities for the selected consultant 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 system shortlisted Aon Hewitt, NEPC, and Verus Advisory.
Deputy Chief Investment Officer Sharmila Kassan said the decision reflected NEPC's approach to asset allocation, the combination of its resources with the firm, the team proposed, and the opportunity to gain new insight. She added that any of the finalists would have been acceptable, as the evaluation scores were very close. NEPC will begin its engagement with the ERS on January 1.
In a separate change, 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 with analysis and assessment of funds, co-investments and infrastructure investments, monitor portfolio performance against the designated benchmark, and support periodic reviews of the ERS's infrastructure policies and benchmarks.
Bidders for the private equity and infrastructure mandate included Albourne America, Pension Consulting Alliance, StepStone Group Real Assets, Hamilton Lane Advisors, Townsend Holdings, Meketa Investment Group, and Pavilion Alternatives Group.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.