State Universities Retirement System
Request for Proposal
Emerging Markets Debt
2014
Table of Contents
I.
Request For Proposal Summary Statement
3
II.
Background Information
3
III.
Specific Services Requested from the Investment Manager
4
IV.
Minimum Qualifications
4
V.
RFP Specifications
5
VI.
Projected Schedule of Events
7
VII.
eVestment Alliance Database Submission
7
VIII.
Appendix A
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State Universities Retirement System (SURS)
Request for Proposal (RFP)
2014
Emerging Markets Debt Manager Search
I. RFP Summary Statement
The State Universities Retirement System (“SURS” or the “System”) is requesting proposals from
qualified firms to provide active, long-only, liquid, emerging markets debt investment management
services which, after fees, exceeds the return of the agreed upon benchmark.
II. Background Information
Agency Description
SURS is the administrator of a cost-sharing, multiple employer public employee retirement system.
SURS membership includes employees of the Illinois public universities and other affiliated
organizations. Currently, SURS membership totals more than 200,000 active, inactive and retired
participants. SURS maintains both a defined benefit plan (DB plan) and defined contribution plan.
As of June 30, 2013, the date of the most recent actuarial valuation report, the funded status of the
DB plan was 41.5% based on the actuarial value of assets and 43.7% on a market value basis.
Defined Benefit Plan Investment Program
As of June 30, 2014, the DB plan trust totaled $17.3 billion with a target asset allocation as follows:
U.S. Equity
Non-U.S. Equity
Global Equity
Core Fixed Income
Emerging Markets Debt
TIPS
Private Equity
Real Estate
REITS
Hedged Strategies
Opportunity Fund
Commodities
Target
23%
19%
8%
19%
3%
4%
6%
6%
4%
5%
1%
2%
Legislated Investment Restrictions Relating to the Republic of the Sudan and Iran
In 2007, the Illinois General Assembly passed Public Act 095-0521, restricting investment in
companies domiciled in, managed or controlled by, or doing business with the Republic of the
Sudan. SURS investment managers are required by law to abide by the restrictions.
Additionally, information pertaining to the Iran divestment law approved by the Illinois General
Assembly on September 11, 2007, can be found at Public Act 095-0616.
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State Ethics Laws
In April 2009, Public Act 96-0006 amended the Illinois Governmental Ethics Act and provides
guidelines for ethical practices concerning state pension plans. Investment managers seeking to be
considered for this mandate should be familiar with and must comply with the provisions of this Act.
Public Act 96-0006 encourages the Board to increase the racial, ethnic, and gender diversity of its
fiduciaries, to the greatest extent feasible within the bounds of financial and fiduciary prudence. In
furtherance of this Act, it is the goal of the Board to use its best efforts to increase the racial, ethnic,
and gender diversity of its fiduciaries, including its investment managers and consultants. The
Board encourages minority-, female- and persons with a disability-owned investment manager to
submit proposals to this RFP.
A section of the Illinois Procurement Code concerning prohibitions of political contributions for
certain vendors, (30 ILCS 500/50-37), may or may not apply to SURS investment managers or
consultants. SURS is not subject to the Illinois Procurement Code, generally (30 ILCS
500/1-15.100). However, each investment manager and consultant should be familiar with the
provisions of section 50-37 of the Procurement Code and comply with this section if the investment
manager or consultant deems it appropriate.
III. Specific Services Requested from the Investment Manager
SURS is requesting information from qualified firms to provide active, long-only, liquid, emerging
markets debt investment management services utilizing USD, local currency and blended mandates.
The purpose of this allocation is to reduce total plan risk and diversify the portfolio. It is anticipated
that one or more investment managers will be hired to manage 3% of the total SURS portfolio.
IV. Minimum Qualifications:
The Proposer must meet all of the following minimum qualifications to be given further
consideration. Failure to satisfy any of these qualifications and requirements upon submittal of the
Proposal will result in the rejection of the Proposal. The Proposer must certify in writing on the
Minimum Qualifications Certification, Appendix A, that it meets all of the minimum qualifications.
Such certification must include evidence of how each qualification is met and must be signed by an
individual who is authorized to bind the Proposer contractually.
1. The responding firm, or one or more principals of the firm, must have three years or more
experience managing emerging market debt portfolios for institutional investors.
2. The firm must be a bank or trust company authorized to conduct a trust business
in Illinois or an investment advisor registered with the SEC.
3. The responding firm must demonstrate that they are able to offer SURS either a separate
account or a commingled account structure for this mandate. The commingled fund must offer
monthly liquidity or better.
SURS retains the sole right to decide whether any Proposer is qualified to bid, including determining
whether any Proposer’s qualifications are sufficiently comparable to satisfy all of the above
minimum qualifications.
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V.
RFP Specifications:
If, in response to this RFP, trade secrets or commercial or financial information are furnished under a
claim that they are proprietary, privileged or confidential and that disclosure of the trade secrets or
commercial or financial information would cause competitive harm to the person or business, such
claim must be clearly made and such information must be clearly identified. The information must
be identified in the RFP response and provided separately from the remainder of the RFP response.
Such a claim is not definitive. SURS has the right and obligation to determine whether such
information is exempt from disclosure under the Illinois Freedom of Information Act (5 ILCS 140/7
and 7.5). However, no information will be determined to be proprietary, privileged or confidential
unless it is identified and separated as indicated herein.
Specific Items Requested from Respondent Firms:
Enumerated below are the specific items requested from respondent firms.
1. Letter of Transmittal. A letter of transmittal must be submitted on the Proposer’s official
letterhead. The letter must identify all documents provided collectively as a response to the
RFP, and must be signed by an individual authorized to bind the Proposer contractually. An
unsigned proposal will be rejected. The letter must also contain the following:
a. Statement that the proposal is being made without fraud or collusion; that the
Proposer has not offered or received any finder’s fees, inducements or any other form
of remuneration, monetary or non-monetary, from any individual or entity relating to
the RFP.
b. Statement that discloses any current business relationship or any current negotiations
for prospective business with the Board or any SURS Board Members or SURS Staff.
c. Statement that the proposing firm has been in compliance with the System’s Quiet
Period Policy and Ex-Parte Communications Policy.
2. Minimum Qualification Certification. The Proposer must complete the certification in
Appendix A and provide all supporting documentation.
3. eVestment Alliance Database Submission. The Offeror’s product and performance data will
be analyzed through the use of a third party database currently utilized by our Investment
Consultant, NEPC, LLC. The database is provided by eVestment Alliance, which can be
located on the web at: www.eVestmentalliance.com. For additional information, please see
Section VII of this RFP, entitled, “eVestment Alliance Database Submission.” After you
have provided the information to eVestment Alliance, please print off a copy of the
information you have provided and return with your response to the RFP.
Submission Deadline:
The completed RFP must be delivered (electronically, please) by 4:30 pm CT, Monday, August 13,
2014. Earlier responses are welcome. Any RFP delivered after the deadline will not be considered.
The e‐mail subject line must read as follows: “Emerging Markets Debt RFP Response – Name of
Respondent” and should be sent to both SURS and NEPC at:
Douglas Wesley, CFA, Deputy Chief Investment Officer, at [email protected], and Bobby Jaramillo,
NEPC, at [email protected].
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Submission of Questions:
In order to clarify any issues in this Request for Proposals, the System will respond only to questions
that are presented in writing via e-mail to: Douglas Wesley, CFA at [email protected]. All questions
should be submitted to SURS by 8:00 AM CT Thursday, July 17, 2014. These questions will be
consolidated into a single Q&A document and responded to by the System on, or about, Thursday,
July 24, 2014. The Q&A document will be posted on the SURS web site at www.surs.org/rfp
without divulging the source of the query.
Communications with SURS
Other than existing normal business matters, respondents, potential respondents, or their
representatives should not contact anyone at SURS (including SURS staff, members of the SURS
advisory committees and members of the SURS Board) other than the investment team assigned to
the RFP listed above.
In addition, respondents should not discuss this RFP with any employee of SURS’s custodian,
managers, consultants, legal counsel, or other advisors or persons/entities having contracts or other
affiliations with SURS. The Quiet Period for this search was initiated on April 24, 2014.
FAILURE TO OBSERVE THIS RULE IS GROUNDS FOR DISQUALIFICATION
SURS Quiet Period Policy:
Please note the Quiet Period Policy that establishes guidelines by which the Board of Trustees and
staff will communicate with prospective service providers during a search process. Please review
Section VII of the Investment Policy and observe the Quiet Period guidelines.
Rights Reserved:
SURS reserves the right to amend any segment of the RFP prior to the announcement of a successful
contractor. In such an event, all responders will be afforded the opportunity to revise their proposal
to accommodate the RFP amendment.
SURS reserves the right without prejudice to reject any or all proposals submitted. There is no
express or implied obligation for SURS to reimburse for any expenses incurred in preparing
proposals in response to this RFP.
Ex-parte Communications:
The State Officials and Employees Ethics Act (5 ILCS 430/5-50) provides that all “ex parte
communications” concerning investment, rulemaking or quasi-adjudicatory matters pending before a
State agency must be documented and some must be reported. An “ex parte communication” is any
written or oral communication by any person that imparts or requests material information or makes
a material argument regarding potential action concerning an investment, a rulemaking process, or a
quasi-adjudicatory matter. An “ex parte communication” does not include statements publicly made
in a public forum or communications among employees of the State agency.
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An “ex parte communication” from an “interested party” or his or her official representative
or attorney to an employee or the agency must be memorialized and made a part of the record.
An “interested party” is a person or entity whose rights, privileges, or interests are the subject
of or are directly affected by an investment, regulatory or quasi-adjudicatory matter.
An “ex parte communication” other than that described above must be reported by the staff
member or Board Trustee immediately to the agency’s Ethics Officer. The communication
must be memorialized and made a part of the record. The communication must be filed with
the Executive Ethics Commission, accompanied by a memorandum from the Ethics Officer.
VI. Projected Schedule of Events:
July 7, 2014
July 17, 2014
July 24, 2014
August 13, 2014
September 2014
October 2014
December 11, 2014
January 2015
Dissemination of RFP
Deadline for questions to SURS
Responses to questions submitted to SURS
RFP responses due by 4:30 pm CT
Identify firms for further consideration
Interviews with selected firms
Finalist presentations to SURS Board of Trustees
Contract Award Date
VII. eVestment Alliance Database Submission
Populating the eVestment Alliance database with your firm and product information is essential to
the completion of the RFP process. If the database is not fully populated, your firm’s response will
be considered incomplete and could be grounds for discontinuing consideration of your firm’s
product for this search.
The eVestment Alliance database gathers firm and product data including but not limited to:
•
•
•
•
•
•
Assets under management
Qualitative description of firm and product
Investment professionals gained and lost, work experience and education
Product holding and characteristics
Performance for vehicle recommended
Composite description AIMR disclosures
Please be sure to leave no fields blank. Respond as 0, none, or N/A only when necessary. You will
not be contacted by our consultant to fill in missing fields. Use additional comment fields provided
to make qualifying notes as applicable.
If your firm does not already utilize the eVestment Alliance database, you can participate by sending
an email with your contact information to: [email protected].
A representative from eVestment Alliance will contact you shortly after to establish the firm in the
database. There is no charge for supplying data to eVestment Alliance.
After you have provided the information to eVestment Alliance, please print off a copy of the
information you have provided and return with your response to the RFP.
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Appendix A
MINIMUM QUALIFICATION REQUIREMENTS AND CERTIFICATION
Proposers must satisfy each of the following minimum qualifications for this RFP, in order to be
given further consideration by the Board of Trustees. Failure to satisfy each of the requirements
will result in the immediate rejection of the proposal. Failure to provide complete information
will result in the rejection of the proposal. Please circle “YES” or “NO” where indicated. If
evidence is requested, please provide complete documentation.
1. Proposer and its proposed team have all authorizations, permits, licenses and
certifications required by federal and state laws and regulations to perform the services
specified in this RFP at the time Proposer submits a response to the RFP.
(Yes/No):_______
2. Proposer or one or more principals of the firm have three years or more experience
managing emerging market debt portfolios for institutional investors. (Yes/No):_______
3. Proposer is a bank or trust company authorized to conduct a trust business in
Illinois or an investment adviser registered with the Securities and Exchange
Commission under the federal Investment Advisers Act of 1940. (Yes/No):_______
If registered with the SEC, please provide Form ADV I and II.
4. Proposer agrees to provide the services as detailed in the Specific Services Requested
from the Investment Manager section of this RFP and any other requirements as stated in
this RFP. (Yes/No):_______
5. Proposer must demonstrate that they are able to offer SURS a separate or commingled
account structure for this mandate (Yes/No):_______
IF PROPOSER PROVIDED A “NO” RESPONSE TO ANY OF THE MINIMUM
QUALIFICATION REQUIREMENTS ABOVE, PROPOSER SHOULD NOT SUBMIT A
PROPOSAL TO SURS.
PLEASE CERTIFY THE PROPOSER’S SATISFACTION OF THE MINIMUM
QUALIFICATIONS BY PROVIDING THE PROPOSER’S AUTHORIZED SIGNATURE
BELOW.
Authorized Signer Name:
Title:
Respondent Firm:
Signature:
Date:
________________________________
________________________________
________________________________
________________________________
________________________________
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