LACERS Board has adopted an Investment Manager Search and Selection Policy to guide the search process for public markets managers. To be eligible for consideration for an active public markets mandate, an investment manager must, at a minimum, meet the following policy criteria:
- Be a registered investment advisor under the Investment Advisors Act of 1940 or possess a bank exemption;
- Have a proven and verifiable track record of at least five years as of the most recent quarter end;
- Conform to CFA Institute’s Global Investment Performance Standards (“GIPS”);
- At least 60% of rolling four quarter information ratios (i.e., excess return divided by excess risk) must be positive versus a mandate-appropriate benchmark, gross of fees, for the last five years (12 of 20 quarters);
- Assets under management must be of sufficient size that LACERS’ expected mandate size would not comprise more than 20% of the firm’s total assets.
The Board has also adopted an Emerging Investment Manager Policy to establish a framework for consideration of emerging managers. To be eligible for consideration as an emerging manager for a public markets mandate, a manager must, at a minimum, meet the following policy criteria:
- Have no more than $2 billion in total firm assets under management;
- Have a minimum of $50 million under management in the product being considered and LACERS portfolio mandate size shall not exceed 20% at the time of hire;
- Been in existence for a minimum of one year;
- The portfolio manager must have a minimum of five years verifiable experience managing the particular investment product;
- No person or entity, other than the principals and/or employees of the firm, shall have more than a 49% ownership interest of the firm.
LACERS employs Wilshire Associates for assistance in selecting investment managers for public markets mandate searches. Investment managers interested in participating in a search mandate must submit their proposed product’s historical monthly performance and quarterly portfolio data since inception to the Wilshire database portal, Odyssey, which is located on Wilshire’s website through the following link: http://compassportal.wilshire.com. In addition to the provision of historical investment performance and portfolios to the Wilshire Odyssey, investment managers must complete and submit a Due Diligence Questionnaire (“DDQ”) for the product they wish to submit for consideration in a LACERS search. Completion of the DDQ is necessary in order to receive a formal product evaluation under Wilshire’s manager research process. A copy of a Wilshire DDQ may be requested through the following link: firstname.lastname@example.org.
Firms/individuals interested in contracting with LACERS must comply with applicable City and LACERS policies. These policies include:
Requirements during the competitive proposal process:
- Marketing Cessation Policy - This policy prohibits direct marketing to members of the Board or LACERS staff by potential candidates of contract awards during the competitive bid process.
- Third Party Marketing Compliance Policy - This policy requires disclosure of the identity of third party marketers and/or individuals by whom a firm is referred to LACERS, in order for a firm's investment proposal to remain under consideration. Firms will be required to indicate those third party marketers and/or referring individuals that stand to receive fees or other considerations in the event that a contract with LACERS is eventually secured.
- City Lobbying Law - Any individual who directly communicates with a City official for the purpose of influencing "municipal legislation" (as defined in the ordinance) and who is compensated to spend 30 or more hours in any consecutive three-month period engaged in lobbying activities must register as a lobbyist with the City Ethics Commission.
Requirements upon contracting with LACERS
- Investment Policies (Investment-related contracts) - All Investment service providers must comply with LACERS General Investment Policies.
- City Standard Provisions for City Contracts (Non-investment contracts) - The provisions contained within the document are required with every City contract.