Town of Swampscott (MA) Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Manager Services
The Swampscott Retirement Board is soliciting proposals from investment management
firms to manage a Large Cap Growth Equity mandate of up to $4.5 million for the
Retirement System's $27 million pension fund. Qualified firms must have a minimum of
$1 billion in total assets under management, $500 million in the proposed Large Cap
Growth strategy, and a minimum of five years of performance history in the strategy.
Additional minimum criteria apply. To request additional information or a copy of the
RFP, please contact Maura Goulart at Fiduciary Investment Advisors via e-mail at
[email protected].
All investments made by the Swampscott Retirement Board are subject to the provisions
of the Massachusetts General Laws, Chapter 32, Section 23 and the rules and regulations
of the Public Employee Retirement Administration Commission (PERAC) [840 CMR
16.00 et seq].
Proposal Deadline is Friday, May 21, 2010 at 4:00 PM EST. Proposals received after the
deadline will not be considered.
Respondent must submit separately sealed proposals for services and pricing, clearly
labeled “Proposal for Services – Large Cap Growth Equity RFP” and “Proposal for
Pricing –Large Cap Growth Equity RFP”. Please submit a total of two complete sets of
the proposal, in hard copy and electronically on CD as follows:
Submit one original hardcopy and electronic version on CD to:
Mrs. Jeanne Darcy
Administrator
Swampscott Retirement Board
Town Hall, 22 Monument Avenue
Swampscott, MA 01907
One complete copy with electronic version on CD to:
Maura Goulart, CFA
Research Associate
Fiduciary Investment Advisors
100 Northfield Drive
Windsor, CT 06095
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
1
Proposals will be evaluated based on the manager’s qualifications as they relate to
meeting the minimum criteria for the proposed investment strategy including but not
limited to the stability of the organization and investment team, assets under
management, investment philosophy and process, consistency of performance, risk
management, and fees. Submissions should be clear and concise. Any amendments to
proposals, including corrections, modifications, or withdrawals must be submitted in
writing and by the proposal deadline.
All respondents must include the following with the proposal:









Vendor Certification (PERAC)
Disclosure Statement (PERAC)
Completed Minimum Criteria Response
Executive Summary and Investment Manager Questionnaire
Sample of investment reports provided to clients
Proof of insurance coverage levels
Form ADV Parts I and II
Independent audit or verification report of performance results, if available
Separately Sealed Proposal for Pricing – Investment Manager Fees
The Vendor Certification and Disclosure Statement for Investment Managers are
attached. They may also be found on PERAC’s website at
http://www.mass.gov/perac/Investunit/forms.htm. These forms must be submitted in
their original format.
Please direct any questions regarding the RFP in writing via e-mail to Maura Goulart at
Fiduciary Investment Advisors, [email protected].
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
2
CERTIFICATION OF GOOD FAITH
The undersigned certifies that this questionnaire has been submitted in good faith and
without collusion or fraud with any other person. As used in this certification, the
word "person" shall mean any natural person, business, partnership, corporation,
union, committee, club, or other organization, entity or group of individuals.
_______________________________________
Name of person signing Questionnaire (print or type)
_______________________________________
Authorized signature of person signing Questionnaire
_______________________________________
Title
_______________________________________
Company
_______________________________________
Date
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
3
MINIMUM CRITERIA RESPONSE
Firms must meet all of the following minimum criteria. Proposals that do not meet the
criteria will be considered non-responsive. Please respond to each of the following by
initialing the "YES" response to certify that the firm does meet the minimum criteria.
1. The firm is a registered investment advisor with the SEC pursuant to the
Investment Advisors Act of 1940, or is exempt from registration (with the
nature of the exemption provided).
___YES
2. The firm has been in operation for at least five years as of March 31, 2010 as
an investment management organization as determined by the firm's
registration with the SEC.
___YES
3. The firm has at least $1 billion in total assets under management.
___YES
4. The firm must have at least $500 million in the proposed product and a
minimum of five years of performance history in the proposed product.
___YES
5. The three and/or five year annualized return of the performance composite for
the proposed product has exceeded the Russell 1000 Growth Index, net of
management fees, as of March 31, 2010.
___YES
Certified by:
_________________________ ______________
Name
Date
______________________________________
Title
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
4
EXECUTIVE SUMMARY
(Maximum of three pages)
Provide all information as of March 31, 2010
A. Firm Name and Location – also note the location of the Large Cap Growth Team and
where these investment management services are carried out
B. Primary Contact Information
C. Firm-wide Assets Under Management (total)
D. Name of Proposed Investment Strategy
E. Month and Year firm began managing proposed Large Cap Growth Equity strategy.
If the strategy was managed at a prior firm, please explain and include all relevant
dates and key investment personnel information.
F. Large Cap Growth Equity Assets Under Management (total)
G. Proposed Large Cap Growth strategy Assets Under Management (total), if different.
Please also note the strategy assets by investment vehicle (i.e., separate account,
commingled fund, mutual fund.).
H. Month and Year firm began managing proposed Large Cap Growth Equity strategy.
If the strategy was managed at a prior firm, please explain and include all relevant
dates and note changes in key investment personnel as a result.
I. Briefly describe your investment philosophy and process and note how your firm
intends to add value for its Large Cap Growth clients. Please explain how you
differentiate your firm and investment strategy from your competitors. Note any
unique characteristics of your research and/or investment process.
J. List the Key Members of the Investment Team. For each, please provide the years of
investment experience, years in current role and years at the firm. Note the lead
decision maker(s) or team leader(s). Are team members responsible for other
investment strategies at the firm?
K. Composite level performance for the proposed Large Cap Growth strategy.
Name of Composite:
As of 3/31/10
Qtr
Ytd
Trailing Periods
1 Yr
3 Yr
5 Yr
Composite
Gross
Composite
Net
Russell 1000
Growth Index
L. Please note the available investment vehicles for the proposed strategy and account
minimums.
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
5
INVESTMENT MANAGER QUESTIONNAIRE
I. GENERAL BACKGROUND INFORMATION
A. Name and Full Address of Firm
B. Please check appropriate fiduciary classification for your firm:
_____Bank
_____Insurance Company
_____Registered Investment Advisor (Investment Advisors Act of 1940)
_____Affiliate of Fiduciary (Name Classification)
_____Other (explain)
C. Company Contacts
Primary Client Service/Relationship Manager:
Title:
Phone:
Portfolio Management:
Title:
Phone:
RFP/Data Contact:
Title:
Phone:
D. Ownership & Affiliates
1. Briefly describe the organizational structure of the firm.
2. Please list all owners of firm include breakdown of internal and external
ownership.
3. List all companies affiliated with the firm.
4. Please provide a brief history of your firm. Provide a timeline of key dates
and events.
E. Offices and their Functions:
Please list primary locations and functions where the firm has offices and provide
number of personnel at each location. Highlight the location of where the
investment and service capabilities for the proposed product are carried out.
Location
Function
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
# Personnel
May 2010
6
F. Please indicate month and year any external assets were first managed by the
firm.
G. Please indicate the strategy name and inception date of the proposed product.
H. Insurance/Legal/Compliance
1. Please indicate the name of carrier, dollar amount of coverage and note any
deductible.
Type
Errors & Omissions
Fiduciary Liability
Fidelity Bonding
Other (please explain)
Carrier
Aggregate
Coverage
Deductible
2. Is there any currently any pending business litigation or legal proceedings against
your firm? If yes, please describe.
3. Has there been any business litigation, legal proceedings or regulatory action
against the firm during the previous ten years? If yes, please describe.
4. Indicate the date of your most recent SEC examination. Were there any major
deficiencies? If yes, please explain the findings and the firm’s resolution to such
deficiencies.
5. Is there a dedicated compliance officer? Who is primarily responsible for
developing policies and procedures to ensure firm-wide compliance with
applicable state and federal law?
6. Do you have a written Anti-Money Lending (“AML”) or Know-Your-Client
(“KYC”) policies and procedures? If yes, please provide. If no, please explain
how you guard against money laundering and, if applicable, how do you comply
with the Patriot Act?
7. Please describe your policies and procedures as they relate to personal trading for
your employees.
8. Describe your policies and procedures on eliminating potential conflicts of
interest.
9. What systems are in place for ensuring that portfolio managers are in compliance
with client guidelines?
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
7
10. Please describe the firm’s disaster recovery plan. Indicate if it has ever been
implemented and provide the date of the most recent test.
I. Personnel:
1. Please indicate the number of people that have the following titles or perform the
following roles as their primary responsibility (Please do not double count).
Firm-wide
Proposed Product
Chief Investment Officer
Portfolio Managers
Research Analysts
Economist
Traders
Portfolio Administration
Marketing
Client Service
Compliance
Administrative
Executive
Other (specify)
Total Employees
2. Please note the key investment personnel of proposed product (key personnel include
all individuals directly involved in the investment management process of the product
described in this questionnaire). Please provide an organization chart including the
key decision makers and supporting investment staff on the Large Cap Growth team,
along with professional biographies of the members of the team as an attachment to
the RFP.
Name/Title
Yrs in
Industry
Yrs with
Firm
Yrs
in Role
Equity
Owner?
3. What measures are taken to increase retention of key investment professionals?
4. Describe the compensation structure for your firm's key investment professionals
(portfolio managers, research analysts, etc.) including incentives, bonuses,
performance based compensation, and equity ownership.
5. Describe firm’s succession plan relative to the departure of key investment
professionals.
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
8
6. Please list personnel changes over the last five years ending December 31, 2009 for
the key executives of the firm and key investment personnel as it relates to the
proposed product:
Key Executives of the Firm
Departures
Name
Position
Start
Date
Departure
Date
Reason for
Leaving
Position
Start
Date
Departure
Date
Comments
Position
Start
Date
Departure
Date
Reason for
Leaving
Position
Start
Date
Departure
Date
Comments
Additions
Name
Key Investment Personnel for Proposed Product
Departures
Name
Additions
Name
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
9
II. ASSETS UNDER MANAGEMENT
A. Please provide your assets under management as of March 31, 2010.
Total Firm
Assets ($Mil)
Clients
Total Firm-wide Assets
Total Tax-Exempt Assets
Total Fixed Income
Total Domestic Equity
Total International Equity
Total Other (Explain)
Total Large Cap Growth Equity AUM
Proposed LC Growth Vehicle AUM
By Client Type
Total Firm
Assets
# of
($Mil)
Accounts
Proposed Product
Assets
# of
($Mil)
Accounts
Corporate
Taft Hartley
Public Fund
Endowment/Foundation
Individuals
Other (Specify)
Total
B. Please list total assets under management (including assets gained and lost) for the
last 5 calendar years and the most recent quarter:
Firm Wide
Ending
Market Value
($Mil)
Assets
Gained
($Mil)
# of Accts
Gained
Assets
Lost
($Mil)
# of Accts
Lost
March 31, 2010
2009
2008
2007
2006
2005
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
10
Proposed Product
Ending
Market Value
($Mil)
Assets
Gained
($Mil)
# of Accts
Gained
Assets
Lost
($Mil)
# of Accts
Lost
March 31, 2010
2009
2008
2007
2006
2005
C. Please list the number of Massachusetts public fund clients you have on a firm wide
basis and also for the proposed product as of March 31, 2010.
Massachusetts Public
Fund Clients
Firm wide
Proposed Product
Market Value ($Mil)
Number of Clients
D. Please note any Massachusetts Public Fund Clients Gained or Lost over the past five
years ending December 31, 2009, firm wide and for the proposed product.
E. Are you comfortable with the size of the asset base in the proposed Large Cap
Growth product? Please describe any capacity constraints if strategy assets were to
grow considerably, at the combined fund level and within any of the underlying asset
classes. At what level of assets will you firm consider closing the strategy/fund?
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
11
III. CLIENT SERVICE
A. Indicate the key personnel involved in client service and their years of experience.
Please highlight the client service professional/relationship manager that would be
assigned to this account.
B. Indicate the frequency for various forms of communications:
Portfolio Review:____
Conference Calls:____
Market Letter:____
Whitepapers:____
C. What size account is required to merit participation by the senior portfolio managers
in finals presentations to potential clients? For accounts that are below this level who
would attend the finals presentations?
D. Are portfolio managers otherwise accessible to clients?
E. Do you copy the consultant on all correspondence to clients?
F. Please provide a description of the reports you typically provide to clients. Is your
firm willing to comply with special reporting requirements as required by PERAC
and/or the Board’s consultant?
IV. INVESTMENT PHILOSOPHY
A. Briefly describe your investment philosophy.
B. Briefly describe this product’s return and risk objectives.
C. What do you consider to be this product’s most appropriate comparative
benchmark?
V. INVESTMENT PROCESS
A. Please describe your security screening and selection process. (Please include: the
universe from which securities are selected, exclusionary or prudence screens
applied, level of quantitative vs. qualitative research, ideal valuation/growth
characteristics, etc).
B. Do you visit companies in which you invest?
C. How does your firm implement its buy and sell decisions? Be specific. Under what
circumstances would your firm deviate from its disciplines?
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
12
D. What is your investment time horizon/ typical holding period for a security?
E. Do you use derivative securities? If so when, to what extent, and how?
F. Do you include new issues /IPOs in the product under review? If so, how are new
issues allocated among client portfolios?
G. What are the unique attributes of your investment process that differentiates your
product from competitors?
VI.
RISK CONTROL PROCEDURES
A. Please describe your upside sell discipline.
B. Please describe your downside sell discipline.
C. What strategies do you employ to limit the portfolio’s downside risk and loss
potential?
D. What miscellaneous control procedures (both quantitative and qualitative) /
software products do you employ?
E. Who is responsible for the product's risk management?
VII. PORTFOLIO CONSTRUCTION
A. Do you place a limit as a percentage of the portfolio on any of the following? If so,
please specify the limits.
Limit
1. Individual security at cost
Yes No
__________%
2. Individual security at market
Yes No
__________%
3. A sector at market value
Yes No
__________%
4. An industry at market value
Yes No
__________%
5. International exposure at market
Yes No
__________%
B. How many securities are contained in a typical portfolio?
C. Are positions equal-weighted? If not, describe how you determine position sizes.
D. Do you over or under weight industries or sectors? How do your sector weightings
typically compare to the most appropriate comparative index’s sector weightings?
Please provide a breakdown of the portfolio’s sector positions (GICS Classifications)
as of the most recent quarter end.
E. Will you avoid certain sectors? Why?
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
13
F. What has been the average portfolio turnover for the last 5 years? (Turnover is
defined as the lesser of purchases or sales divided by average value).
2009_______
2008_______ 2007_______ 2006_______ 2005_______
G. What is the maximum percentage that would be committed to cash? Provide the
average year-end cash position for equity portfolios:
2009_______
2008_______ 2007_______ 2006_______ 2005_______
H. How long does it take to fully invest a new account?
I. How do you limit dispersion in position sizes across client accounts?
VIII. PORTFOLIO MANAGEMENT
A. Please describe your decision making process. Answer the following questions in
your response:
1. How much discretion is given to individual portfolio managers?
2. Are decisions made by committees or by a lead manager? If a lead
manager, please list his/her name and provide a biography. If a committee,
please describe the process for making an investment decision.
3. If a team approach is used, please describe the dynamics and interaction
between the team managers, including analysts, who is responsible for
generating ideas, monitoring investments, and note who is ultimately
responsible for investment decisions.
4. What is the average number of portfolios assigned to each manager?
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
14
IX.
RESEARCH
A. Please attach a short resume of the senior-most employee charged with your research
activities:
B. Please indicate what percentage of the research effort comes from various sources
(must add up to 100%):
Wall Street Research
Research Vendors
Regional Brokerage Research
Annual Reports 10K, etc.
Internal/Original
On Line Sources
(IBES, Bloomberg, etc.)
Company Visits
Other (explain)
(
(
(
(
(
(
)%
)%
)%
)%
)%
)%
( )%
( )%
C. If you have an internal research capability, state the location(s) where such research is
carried out and what specific research is conducted at each location.
D. What securities databases are used by your firm?
E. Provide any commentary you feel would communicate the uniqueness of your firm's
research efforts.
X. TRADING
A. Please discuss execution and allocation of shares across accounts. How do you ensure
fairness?
B. How do you monitor trading costs (market impact plus commissions)? How are
transaction costs managed to reduce their negative impact on performance?
C. Is your firm or its parent or affiliate a broker/dealer? Does your firm trade for client
accounts through this broker/dealer? If so, state how much trading and the reason for
trading with this related party? How is the inherent conflict of interest addressed?
D. Do you use discount or commission recapture brokers? Discuss your policy regarding
the use of soft dollars and directed trades.
E. List the brokers/dealers your firm uses. How are broker/dealers selected, monitored
and evaluated?
F. What portfolio accounting system does your firm use?
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
15
XI. PERFORMANCE
A. Please provide performance composite results for the proposed product as of March
31, 2010. The composite should include all discretionary client accounts of similar
style, both past and present, include cash and be calculated on a size-weighted basis.
Please include all composite disclosures and notes on a clearly marked page
immediately following the composite performance. If your composite is not in
compliance with GIPS® standards, please provide an explanation of the
differences.
Year
Composite
TR Gross
Composite
TR Net
Qtr
Ytd
Benchmark
Market
Value $Mil
# of
Accounts
3 Yr
5 Yr
1Q10
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
As of 3/31/10
Trailing Periods
1 Yr
Composite
Gross
Composite
Net
Russell 1000
Growth Index
If proposing a commingled fund and you are including composite returns, please
also include trailing returns for the commingled fund in the format provided above
in addition to the composite’s return.
B. What efforts are made to control the dispersion of returns within the composite?
C. Is the performance data history submitted compliant with GIPS®? If yes, please
indicate the effective date of compliance. If not, please explain the difference in
composite construction relative to GIPS®.
D. Has the performance history been certified by an independent auditor?
provide a copy of the audit results. If no, please explain.
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
Please
May 2010
16
E. Has the composite been verified for compliance with GIPS® by an independent
verifier? If so, please attach a copy of the latest verification report.
F. Is the current investment team responsible for the historical performance record? If
not, please explain.
G. Was the entire historical performance record generated at this firm? If not, please
explain.
H. Please note the name of the strategy and/or composite profile as provided in the
eVestment Alliance database.
I. Is the strategy available through either of the following vehicles?
provide information requested.
If so, please
a. Commingled Fund
i. Fund Name
ii. Fund Type (Group Trust, 3C7, LP etc.)
iii. Fund Minimum Investment
iv. Liquidity (daily, monthly)
v. Note all third parties (custodian, auditor, administrator)
b. Institutional Mutual Fund
i. Fund Name
ii. Fund Ticker and Cusip
iii. Fund Minimum
iv. Please attach a prospectus
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
17
Swampscott Contributory Retirement System
PROPOSAL FOR PRICING
INVESTMENT MANAGER FEES
LARGE CAP GROWTH EQUITY INVESTMENT MANAGEMENT SERVICES
Please Note: Proposal for Pricing must be submitted in a separately sealed envelope
from the Proposal for Services.
Firm Name:
Strategy Name:
1. Please state the fee schedule for the proposed product, including all breakpoints.
2. Please note if the fee schedule applies to both separately managed and commingled
vehicles. If different, please state the fee schedule for the strategy’s commingled
vehicle, and note the legal structure of the vehicle (registered mutual fund, group
trust, 3c7, LP, etc.).
3. If the proposed product is offered through a commingled vehicle, does the fee
schedule include custody and other applicable expenses? If not, please disclose any
additional expenses in addition to the investment management fee applicable for the
commingled fund. Please note if entry and/or exit fees apply.
4. Will your fee be applicable for the duration of the client assignment?
5. Is your proposed fee schedule negotiable?
6. What is the firm's minimum account size for this strategy? Please note the account
minimums across available investment vehicles.
7. Is there a minimum annual fee?
Swampscott Contributory Retirement System
Request for Proposal
Large Cap Growth Equity Investment Management Services
May 2010
18