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REQUEST FOR PROPOSAL - Pension Consulting Alliance by wuzhenguang

VIEWS: 25 PAGES: 14

									                                                                                                       th
                                                                                              514 NW 11 Avenue, Suite 203
                                                                                                       Portland, OR 97209
                                                                                                      Phone: 503.226.1050
                                                                                                        Fax: 503.226.7702
                                                                                                www.pensionconsulting.com


                                                                               Los Angeles • Portland • New York


                             REQUEST FOR INFORMATION:

     ACTIVE US LARGE CAP GROWTH EQUITY MANAGER SEARCH
PCA is in the process of identifying qualified investment management organizations to manage two
separate Active US Large Cap Growth Equity mandates on behalf of one of our public fund clients,
located in Hawaii. The size of the assignments are expected to be approximately $300 million each, but
could vary depending on a number of factors yet to be determined.

To streamline the process, PCA requests the completion (or update) of the following through 3/31/12:

    i) the eVestment Alliance (“eA”) eASE Database firm and appropriate product questionnaires,
    ii) the questions contained in this document, and
    iii) certification that minimum qualifications have been met.

Since PCA utilized eA to screen for candidates, it is anticipated that much of that information has already
been collected. However, it is imperative that all data fields in the eA questionnaires be updated through
3/31/12, including those areas that in the past your firm may have excluded. Please include all
explanatory notes requested by eA such as “what is included in Other Assets.” Failure to do so may
result in the immediate rejection of your response. The specific product of interest is identified in the
email sent to you and corresponds to the product (“Product”) already presented in eA. Alternative or
substituted products will not be considered.

We request that the update of the eA databases and the completion and return of this RFI to PCA be no
later than May 7, 2012. If interested, please return two (2) hard copies of the completed RFI and an
electronic copy by email to:


   Mr. Colin Bebee
   Analyst
   Pension Consulting Alliance, Inc.
                    th
   514 Northwest 11 Avenue, Suite 203
   Portland, Oregon 97209
   503-226-1050
   colinbebee@pensionconsulting.com



Confidential or Proprietary Information

The information provided within the RFI are subject to the Sunshine Laws, which are U.S. federal and
state laws requiring regulatory authorities’ meetings, decisions and records to be made available to the
public.

The offeror shall designate those portions of the RFI that contains trade secrets or other proprietary
data/information that the offeror wishes to remain confidential. This information must be clearly marked on
each page and readily separable from the proposal to facilitate public inspection of the non-confidential
portions. The entire proposal CANNOT be considered confidential. The fee proposal CANNOT be
considered confidential.




                                                     1
MINIMUM QUALIFICATIONS

All proposals will be evaluated in two areas: 1) the Required Minimum Qualifications and
2) the Preferred Criteria, as specified below.

1. Required Minimum Qualifications (RMQ)

The Proposer must meet all of the following RMQs; otherwise its proposal will be rejected. For each
RMQ, the Proposer must provide a detailed response (one sentence or more) stating how the
Proposer complies, indicating that the Proposer has met the RMQ as of March 31, 2012. A
response that is limited to a mere reference to other sections of the RFP will be insufficient. Any
known deviations from the RMQs below must be disclosed in detail on this form.

 1) Organization
    a) Firm must have been in existence for at least five full years
    b) It must be SEC Registered, a Bank or licensed Insurance Company Affiliate
    c) It must not have been censured by the SEC or subject to regulatory action within the last three
       years
    d) The Proposer will complete the RFP questionnaire in its entirety

 2) Investment Professionals
    a) The Proposer must be directly responsible for the management of the account, and all personnel
        responsible for the account must be employees of the firm
    b) Firm must have three investment professionals dedicated full time to Active US Large Cap
        Growth Equity strategies
    c) It must have six professional employees

 3) Investment Philosophy/Approach
    a) Firm must agree to consider the Russell 1000 Growth Index as a reasonable benchmark

2. Preferred Criteria (PC)

The following PCs are strongly desired by the Plan. Although failure to meet one or more of the PCs may
not necessarily result in disqualification, Proposers who fail to meet one or more of the PCs may be
considered less favorably in the selection process. Please provide a detailed answer for each of the
PCs (one sentence or more). Please do not only refer to other sections of the RFP. Any known
deviations from the PCs below must be disclosed in detail on this form.


 1) Investment Philosophy/Approach
    a) It must be able to adhere to client specified portfolio constraints

 2) Client Base/Services
    a) Total firm assets must be in excess of $2 billion
    b) It must manage at least $1 billion in assets dedicated to Active US Large Cap Growth Equity
        strategy
    c) It must have at least two existing US based tax-exempt clients utilizing Active US Large Cap
        Growth Equity mandate
        i) at least one existing portfolio in the Active US Large Cap Growth Equity Strategy with over
            $500 million or
        ii) two existing portfolios in the Active US Large Cap Growth Equity Strategy with over $250
            million

 3) Historical Performance

                                                      2
    a) Firm must have at least a three-year live (i.e., not simulated or back tested) GIPS compliant
       performance history for the period ending March 31, 2012 in the proposed Active US Large Cap
       Growth Equity strategy
    b) Results must have closely tracked or exceeded the performance of the Russell 1000 Growth
       Index, annualized, over the three years ended 3/31/12.

By signing below, an authorized representative of the Proposer warrants that the Proposer meets all of
the Minimum Qualifications as detailed above. This page must be signed and returned with the completed
RFI.


Authorized Signature                                  Print Name


Title                                                 Date


Company




                                                  3
PART 1: ORGANIZATION

1. Provide the following information:

    Specific (proper) name of organization
    Company’s address
    Specific (proper) name of product
    Inception date of product
    Suggested benchmark
    Proposed vehicle type (i.e., separate account, retail
    mutual fund, institutional mutual fund, commingled
    trust)
    Are derivatives used in managing this product?

2. If selected for this mandate, what is the name of the legal entity that will be represented on the
   contract(s)?

3. Briefly narrate (5 sentences or less) a description of your firm’s overall product offerings (such as
   equity and/or fixed, domestic and/or international, retail and/or institutional focus, etc.) and services
   (investment banking, investment management, credit services, etc.).

4. Does your firm utilize a common investment philosophy across all strategies? If yes, please briefly
   describe. If no, how does the proposed product fit within your firm’s general investment outlook?

5. Provide a brief history of your firm’s involvement in the management of Active US Large Cap Growth
   Equity portfolios. How many years has your firm provided Active US Large Cap Growth Equity
   portfolio management to public pension plans? Other institutional investors?

6. Describe your firm’s history. Detail any ownership and/or firm structural changes.

7. Is the organization involved in any other business other than asset management? If yes, please
   explain.

8. Complete the information in the table below (as of 3/31/12).


    Year founded
    Year firm became SEC registered
    # of firm employees (in total)
    # of investment professionals (in total)
    # of investment professionals (in Mandate)
    % of firm owned by employees
    # of employees with ownership stake
    Location (city and state)
    Parent Company (or equivalent)
                                                     4
9. Are there any anticipated ownership changes and/or influences of parent organization(s)? If yes,
   please describe.

10. Provide information on organizational control/decision-making interests by your parent organization
    and other affiliated parties (i.e., board seats, compensation structure, equity participation, and other
    ongoing concerns, etc.).

11. List all current owners of the firm and % ownership

                                                             Relationship to firm (if            %
         Name/Company                                        any)                                Owned




12. If your organization is a subsidiary, affiliated with another firm or there is outside ownership, please
    address the nature of the relationship, method of communication, hierarchy of decision making and
    degree of influence.

13. Furnish an organizational chart.

14. Insert response as indicated to the following questions (as of 3/31/12). If answer yes (Y) to row C or
    D please provide a brief explanation.

    A. Registered Investment Advisor? (Y/N)
    B. Exempt from SEC registration? (Y/N)
    C. Pending litigation or investigations? (Y/N)*
    D. Previous judgment(s) in last 5 yrs? (Y/N)*
    E. Fiduciary liability insurance? (Y/N)
    F. Error & Omission insurance? (Y/N)
    G. Firm bonded? (Y/N)
    H. GIPS compliant? (Y/N)
    I. Attestation firm/auditor
    *Please answer question directly. Do not refer us to your ADV or other SEC filings.

15. Describe your plans for managing the future growth of your firm in terms of:
       a. Total number of accounts that will be accepted.
       b. Total assets that will be accepted.
       c. Plans for additions to professional staff and approximate timing in relation to anticipated
           growth in the number of accounts or assets.


PART 2: PROFESSIONALS

16. Who should PCA contact regarding any questions about the information contained in your response
    to this RFI?

                            Name/Title/address                  Phone             Email
                                                      5
    RFI Contact
    Portfolio Manager
    Client Service

17. Is there a sub-advisor used on the proposed mandate? If yes, please describe.

18. Are there any contracted services used to manage, operate, or administrate the account? If yes,
    please describe.

19. Indicate the number of personnel as designated below (as of 3/31/12). When completing Column C,
    indicate how many of the individuals listed in Column B are solely dedicated to the proposed product.

                                             A                            B                  C
                                                                                       # Dedicated
                                                                # Proposed                only to
                                             Total                Product               Proposed
                                          Firm Wide                Team                  Product*
   Strategic/Executive Advisors
   Portfolio Managers
   Analysts
   Traders
   Client Servicing/Marketing
  * Not involved in other firm products

20. Do Portfolio Managers have client/marketing duties? If yes, please describe and include the
    percentage of their time allocated to client/marketing duties.

21. Complete the following table with information for the team and/or key personnel associated with the
    mandate. Please order the individuals in terms of Product-specific relevance (most key
    decision makers). If titles are different than Portfolio Manager or Analyst, please indicate which
    individuals are functionally portfolio managers and which are functionally analysts.

                                                                                        Years
                                             Highest                          Years   involved   Years in     Years of
       Name (include                         level of                          with      with    Current    Investment
       designations)           Title        Education       Institution       Firm    Product    Capacity   Experience




22. Provide biographies and/or résumés of all personnel associated with the Product.

23. Are the portfolio managers and/or investment professionals responsible for building the track record
    still managing the proposed product? If not, please detail differences.

24. Does your firm have a succession plan in place for key personnel on this Product? Please describe.

25. Indicate the number of Product-related personnel changes for the past three calendar years ending
    12/31 and for the first three months of 2012 as designated below. For each individual counted in the
    table, please provide the reasons for the change. If changes are due to promotions or transfers
                                                        6
           please specify. (Please note this information should match the data reported in the eVestment
           Alliance database.)

                                       2009                     2010                     2011                  3/31/2012
Product Related Personnel       Gain          Loss       Gain          Loss       Gain          Loss       Gain         Loss

Strategic/Exec. Advisors

Portfolio Managers

Analysts

Traders

Client Servicing/Marketing

      26. What policies are in effect to control the workload as it relates to the number of clients serviced by
          each account manager? Is there a limit on the number of accounts that an account manager may
          handle?

      27. Describe compensation and incentive structures (including bonus and equity participation) for the
          product’s key investment staff, including portfolio managers and research analysts, directly
          associated with the investment product. Please discuss how bonus/performance pools are allocated
          among portfolio managers, analysts, and other functional areas.

      28. Has any employee associated with this product offering been party to any investigations, litigation
          (including any settled out of court), or regulatory action during the past 5 years (ending 3/31/2012)
          while at this or any other firm? If so, please provide (i) a brief synopsis, (ii) the current status, and (iii)
          a comment on the action’s merits.

      29. Explain any legal judgments within the last 5 years pertaining to any current or former employee
          associated with this product while at this or any other firm. Specify whether the employee is involved
          in any pending litigation or investigations. If so, please provide a brief synopsis of the case.


      PART 3: INVESTMENT STRATEGY

      30. Describe your firm’s investment philosophy with regards to the specified mandate. Specify objective,
          approach (i.e. fundamental, quantitative, etc.) Why do you believe this philosophy will be successful
          in the future?

      31. Describe how your approach to this product differentiates your philosophy and process from your
          competitors. What are specific differentiating characteristics?

      32. What types of other Large Cap Growth products would your product complement?

      33. What are your firm’s top-down/macro views on the Large Cap Growth space as a whole?

      34. Please detail the use, if any, of derivative instruments in your strategy. Are their uses intrinsic to your
          management style? If so, what types of derivative instruments do you use? Does the firm have
          model(s) to capture credit/counterparty exposure? briefly describe.

      35. Provide a description of the portfolio construction process for this strategy.
              a. List each stage explicitly.
                     i. Discuss the quantitative and qualitative processes utilized in constructing the portfolio.
                    ii. Discuss process and sources of research in detail
                                                                7
        b. How are sector and individual security weightings determined?

36. Provide a description of the decision-making process detailing the roles and responsibilities of each
    type of investment professional involved (i.e., analysts, portfolio managers, committee members,
    advisory staff etc.).
        a. If there is an investment committee, describe the committee’s role and composition.
        b. Detail efforts made on a team (or consensus) basis.
        c. What latitude or degree of autonomy in decision-making is given to portfolio managers within
            the product team?
        d. Describe who has ultimate decision making authority and accountability.
        e. Where is the team located?
        f. Describe how the analyst team is organized.
        g. Does the analyst team support multiple products? If so, approximately how much of their time
            is focused on this product?
        h. Are there dedicated traders for this product? If not, approximately how much of their time is
            focused on this product?

37. Please briefly describe a recent buy decision that fulfilled its specific investment thesis, and was then
    closed out at a profit. Focus on the idea generation, due diligence, and the decision to exit the
    position.

38. Please briefly describe a recent buy decision that did not fulfill its specific investment thesis, and was
    closed out at a loss. Focus on idea generation, due diligence, and the decision to exit the position.

39. Please describe your sell discipline describing what triggers your portfolio managers to trade a
    security, including one example of a recent security that was sold.

40. Have there been any compliance issues with the allocation (i.e. instruments, sector exposures,
    concentration, etc.)?

41. Describe the market conditions that would cause the portfolio to under- or outperformance the
    benchmark.

42. What is the most appropriate benchmark for your product? Why?

43. Provide expected return information and source(s) of added value over the Russell 1000 Growth
    Index.

                     Sources of Added Value                      %
                Sector Selection
                Security Selection
                Factor/Style Tilts
                Trading Execution
                Other Sources

44. Discuss the risks involved in your strategy, and how you plan to manage these risks. Reference any
    specific risk control factors, if any (i.e., BARRA, tracking error, etc.). How do you ensure that risk
    parameters are in line with benchmark returns and within client guidelines?

45. Describe any changes (or events) during the portfolio’s tenure impacting performance results.

46. Has there been any changes to the investment process (or models if applicable) since the inception
    of the product? If so, please describe.


                                                      8
PART 4: RISK CONTROL

47. Please supply the internal investment guidelines for your mandate’s strategy and complete the table
    below.

    Policy Limits
                                            Guidelines           Maximum or           How Established
                                           (Yes or No)             Range         (Absolute or Index Relative)
    Max Cash Position
    Max Position Size
    Max Sector Exposure
    Max Industry Exposure

48. Describe your firm’s risk philosophy (i.e., benchmark relative or absolute loss aversion).

49. Describe your views on the risks within the current Large Cap Growth space as a whole.

50. Describe the risk models/controls used in portfolio construction. Is cash used as a method of risk
    control?

51. How do you monitor the product’s adherence to its investment style and process? Specify who is
    responsible.

52. Describe how you evaluate and monitor liquidity risk, specifically commenting on how you would
    handle an “illiquidity event.”

53. Do you or have you imposed any restrictions on client redemptions during illiquidity events? If yes,
    please describe.

54. What is your firm’s expected excess return and tracking error target to the Russell 1000 Growth
    Index?

55. How do you monitor portfolio parameters with respect to client guidelines? What compliance
    systems/tools are used?

56. How important is benchmark tracking error in the portfolio construction?              Is it measured and
    managed? If so, how?


PART 5: CLIENT BASE AND SERVICES

57. Provide the following as of 3/31/12 (Please note this information should match the data reported in
    the eVestment Alliance database.)

                                                      Firm                                Product
                                      Assets ($mil)          # of Accounts    Assets ($mil)     # of Accounts
  Total Assets
  Total Institutional Assets
  US Tax Exempt
  US Taxable
  By Client Type
    Corporate
    Public Fund
                                                       9
   Union/Multi-Employer
   Foundation & Endowment
   Health Care
   Insurance
   High Net Worth
   Wrap Accounts
   Sub-Advisor
   Other

58. List your 10 largest clients in the Product in order of Assets under Management (AUM) with the
    following information as of 3/31/12. If you are unable to provide both client Name and AUM, PCA
    would prefer you provide AUM (and Client Type).

                                                                                            US Tax
                                                                                            Exempt
                                                          Date                              Client (Yes or
           Name                           Client Type     Retained          AUM ($mil)      No)
    1.
    2.
    3.
    4.
    5.
    6.
    7.
    8.
    9.
    10.

59. What is the minimum, average, and maximum account size for this mandate as of 3/31/12?

60. Please provide the names, addresses, phone numbers, contacts, and 3/31/12 market values of the
    three largest US public pension plans (or most equivalent) for which you manage this Product.
    Please also secure permission from your clients to permit reference checking prior to submitting your
    proposal.

61. Complete the following tables indicating accounts and market value of assets gained and lost for
    each of the last three calendar years and the first three months of 2012. Please provide reasons
    for each client loss, and for any meaningful changes in firm wide and/or product assets. (Please note
    this information should match the data reported in the eVestment Alliance database.)

   Firm Wide
                                      2009              2010             2011             3/31/2012

                                  Gain    Loss     Gain     Loss     Gain      Loss      Gain   Loss

    Total # of Accounts

    Total Assets

    # of Public Fund Accounts

                                                   10
    Public Fund Assets


   Product

                                       2009               2010             2011            3/31/2012

                                  Gain     Loss      Gain     Loss    Gain     Loss      Gain     Loss

    Total # of Accounts

    Total Assets

    # of Public Fund Accounts

    Public Fund Assets


62. Please provide the following product information for the table below during the last five calendar years
    or since inception if less than five years and year-to-date (3/31/12). Please provide reasons for any
    meaningful changes in total assets and/or clients


   Assets under Management (as of 12/31)
                                              2007          2008       2009         2010         2011      3/31/2012
    Total Firm-wide assets
    Total Firm-wide public fund assets
    Total Active US Large Growth
    Equity assets
    Total Product assets
    # of Total firm-wide clients
    # of Public fund clients
    # of Active US Large Growth Equity
    clients
    # of Product clients


PART 6: PERFORMANCE / QUANTITATIVE CHARACTERISTICS

63. Provide monthly rates of return (one NET of fees and one GROSS of fees) since inception, ending
    March 31, 2012 with respect to both a commingled vehicle and a separate account composite, if
    available. Provide these by submitting this information to eVestment Alliance and by using an Excel
    spreadsheet. Performance for each should be monthly, in ascending chronological order, and in one
    column, with no spaces or separations for aggregation (such as each quarter or by calendar year).
    Label each column by specific (proper) name, vehicle type, and NET or GROSS of fees.

64. At what level of GIPS compliance are these reported? Include all performance-related disclosures
    regarding composites. GIPS composite reporting formats are encouraged.

65. How much value in basis points annualized should your investment product add over the benchmark?
    What is the expected tracking error? List any incidences of significant tracking error, relative to
    expected tracking error for the strategy, that have arisen in the management of this account for the
    last three years, describing the reasons for this tracking error.

66. Describe how you analyze and evaluate the performance of the product. Include a discussion of your
    performance attribution analysis and any models or tools used. How do you incorporate the results of
    the performance attribution analysis in the management of the product?

                                                     11
          67. Provide performance attribution for your strategy over the latest three- and five-year periods ending
              3/31/12.

          68. Please provide the following portfolio characteristics as of March 31, for both the product and the
              Russell 1000 Growth Index as designated in the tables below.

General Information
                                          3/31/08               3/31/09              3/31/10             3/31/11                 3/31/12
                                     Product       Index   Product   Index     Product     Index   Product     Index      Product      Index
 Number of issues
 Holdings Range
 Annual Turnover (by weight)
 Weighted Avg. Market Cap (Mil)
 Current Dividend Yield
 Current P/E (12-mo Trailing)
 Current P/B
 5 Year ROE
 Earnings Growth (Next 5 Yrs)
 % in Cash


 % of Portfolio in Cap Range (by percent held)
                               3/31/08                     3/31/09             3/31/10             3/31/11                 3/31/12
                                Product    Index      Product    Index     Product    Index    Product     Index       Product      Index
   > $50 billion
   $15-50 billion
   $7.5-15 billion
   $1.5-7.5 billion
   $750 million – 1.5 billion
   $400-750 million
   < $400 million

 Sector Allocation (by percent held)
                                3/31/08                    3/31/09             3/31/10             3/31/11                 3/31/12
                                Product    Index      Product    Index     Product    Index    Product     Index       Product      Index
   Consumer Discretionary
   Consumer Staples
   Energy
   Financials
   Healthcare
   Industrials
   Information Technology
   Materials
   Telecom Services
   Utilities
   Other

          Top Ten Holdings (include weighting)
                  3/31/08            3/31/09                     3/31/10                 3/31/11             3/31/12
          1.
          2.
          3.
          4.
          5.
          6.
          7.

                                                                     12
         8.
         9.
         10.


         PART 7: FEES

         69. Please provide your standard fee schedule for all vehicles offered (separate account, commingled
             fund, institutional mutual fund, etc.) for this product? Include specific (or proper) names for each
             Product as delineated by vehicle. For each, indicate minimum asset size or fee requirements and any
             other differentiating factors. If investment vehicle is not offered, please indicate “not offered”.

                                                         Institutional         Institutional
                                    Separate Account   Commingled Fund         Mutual Fund               Other
Product Name

Minimum Asset Level

Minimum Fee

Fee Schedule

Redemption Penalty Fees

Valuation/Liquidity
(Daily, Monthly, Quarterly, etc.)
Does the fund participate
in Securities Lending?
If yes, what is the split?


         70. Have there been any issues regarding securities lending in the commingled fund since the inception
             of the fund? If so, please describe.

         71. Our client may elect to utilize either a separate account or commingled vehicle structure with regards
             to this search. Please provide your proposed separate account and commingled vehicle fee
             schedules for this search? (These fee schedules are what will be used for evaluation purposes.)


                                                 Separate Account                      Commingled Vehicle
     Proposed Fee Schedule
     Proposed Fee in Dollars
     Does the fund participate in
     Securities Lending?
     If yes, what is the split?

         72. Are the “proposed fee” schedules, as stated in the above question, negotiable?


         PART 8: OTHER

         73. Describe proxy services offered by your firm and procedures followed. Discuss your company’s
             ability to support the voting process. List any major voting services with which your institution has
                                                            13
    linkages (e.g., IDC, ISS, & IRRC). Does your firm automatically file for class actions on a client’s
    behalf?

74. Describe trading systems and strategies you use.

75. Does your firm have clients that request you to direct trades through a commission recapture program
    on their behalf? If so, on average, what percentage of total trades has been directed over time?

76. Provide a sample quarterly client report.

77. Much of the information used in this search will be gathered from eA (such as investment strategy,
    etc.). However, the eA questionnaires may not necessarily cover all relevant topics and/or your firm
    may not wish to disclose specific information in their database. Therefore, please use this question to
    elaborate on any areas that you believe deserve additional attention.

78. Does your firm utilize/compensate one or more external placement agents in any of your institutional
    investment offerings? If so, please provide details on (i) how much assets and under what mandates
    the placement agent(s) was/were utilized and (ii) the compensation structure agreed upon between
    your firm and each placement agent (iii) in what capacity they are used in relation to this Active US
    Large Cap Growth Equity mandate.

79. Has your firm paid any unregistered third-parties such as placement agents to solicit government
    business?

80. Does your (or any of your affiliates or subsidiary organizations) have any offices in the State of
    Hawaii? If so, please provide address and phone number.

81. Does your firm engage in any other kind of business in the State of Hawaii (currently or in the past 5
    years)? If so, briefly describe the nature of such business and the time frames, if applicable.

82. Does your firm currently manage institutional investment funds for any clients whose principal
    business operations are located in Hawaii? If so, please provide the name of the firm, a contact
    person, and a phone number.

83. Has your firm, any employees of your firm, or any associate of your firm made any campaign
    contribution to any incumbent elected officials, and candidate for an elected office, or successful
    candidate for any elected office in the state of Hawaii in the last two year period?

84. Has your firm, any employees of your firm, or any associate of your firm coordinated or solicited any
    person or political action committee to make any campaign contribution to any incumbent elected
    officials, and candidate for an elected office, or successful candidate for any elected office in the state
    of Hawaii in the last two year period?




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