Illinois Investment Board to Pull $2.4 Billion From Active Managers

The Illinois State Board of Investment, the entity that manages investments for the pension funds covering the state’s non-school employees and judges, said this week it will yank $2.4 billion from active managers.

It will place that money in passive index funds in a bid to reduce the cost and complexity of its portfolio.

In the last year, the Board has rapidly reduced its allocation to active managers.

From the Wall Street Journal:

The move by the Illinois State Board of Investment, or ISBI, means an agency that oversees $16 billion for state employees, judges and lawmakers will have 35% of its holdings with actively managed investment funds, down from 70% in September 2015.

Limiting the number of active managers will reduce what the board pays in fees and simplify management of the portfolio, said Board Chairman Marc Levine.

[…]

The switch to more passively managed investments in Illinois is being led by Mr. Levine, who became chairman of ISBI in September 2015. Prior to Tuesday’s vote, the board had already terminated a total of nine active money managers over the past 14 months. In March it voted to pull $1 billion from hedge funds.

Two months ago, the board also terminated almost all of the active managers in a separate 401(k)-style plan it manages.