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INVESTMENT MANAGER QUESTIONNAIRE

By Wanda Owens,2014-04-05 03:20
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The Manager will have full discretion to manage the portfolio consistent with IPERS' Investment Policy & Goal Statement and the terms of the contract

    REQUEST FOR PROPOSAL

    ENHANCED CASH PORTABLE ALPHA INVESTMENT MANAGEMENT SERVICES

    RFP #2007 - 5

    September 22, 2006

    Iowa Public Employees’ Retirement System

    7401 Register Drive

    Des Moines, IA 50321

    Phone: 515-281-0030

    Fax: 515-281-0045

    E-mail: www.ipers.org

IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

    Enhanced Cash Portable Alpha Investment Management Services RFP

    Table of Contents

1. Purpose, Minimum Requirements, and Scope of Services ............................................................. 3

    2. Administrative Information .......................................................................................................... 5

    3. Questionnaire ............................................................................................................................ 10

    4. Proposed Contract ..................................................................................................................... 19

    5. Summary of Required Exhibits .................................................................................................. 33

    6. Appendices................................................................................................................................ 35

    Page 2

    IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

    Enhanced Cash Portable Alpha Investment Management Services RFP

    PART 1

    PURPOSE, MINIMUM REQUIREMENTS, AND SCOPE OF SERVICES

    A. PURPOSE

1. This Request for Proposal (“RFP”) is issued by the Iowa Public Employees’ Retirement

    System (“IPERS” or “System”) for the purpose of hiring an investment management firm

    (“Manager”) to provide investment management services for an Enhanced Cash Portable

    Alpha mandate. IPERS seeks proposals from Managers that can provide a bundled portable

    alpha product in which S&P 500 Index derivatives are used to “port” large cap U.S. equity

    exposure onto an actively managed portfolio of fixed income securities (“Product”). The

    Manager will be responsible for actively managing the account such that a beta of

    approximately 1.0 to the S&P 500 Index is maintained and the Effective Duration of the fixed

    income portfolio does not exceed 1 year.

     The total mandate value could be as much as $2,300,000,000. While IPERS expects to hire

    two or three Managers for the mandate, it reserves the right to select more or fewer Managers

    if it is in the best interest of the System to do so. The Manager will have full discretion to

    manage the portfolio consistent with IPERS’ Investment Policy & Goal Statement and the

    terms of the contract between the System and the Manager. IPERS is seeking Products that

    can provide low tracking error to the S&P 500 Index and an information ratio (alpha before

    fees divided by tracking error) of at least 0.50.

2. Proposals are being directly solicited from a select group of investment management firms that

    were screened by applying the minimum requirements below to Wilshire Associates’

    investment manager database. (Wilshire Associates is IPERS’ general investment consultant.)

    However, any firm that meets the minimum requirements of this RFP is encouraged to submit

    a proposal. The RFP is available electronically on the Wilshire Associates website,

    http://www.wilshire.com/BusinessUnits/Consulting/Research/ManagerSearch.html, the IPERS

    website, www.ipers.org, and on the State of Iowa website, www.state.ia.us.

    B. MINIMUM REQUIREMENTS

To be considered as a Manager for the purpose stated above, firms must meet all of the following

    minimum requirements:

1. The firm must be registered as an investment adviser under the Investment Advisers Act of

    1940, or provide proof of bank exemption;

    2. The firm must be willing to accept a performance-based fee arrangement;

    3. The firm’s Product must have a proven and verifiable minimum 5-year record of

    outperforming the S&P 500 Index on a cumulative annualized basis using returns that fully

    comply with the Global Investment Performance Standards (GIPS) (note: simulated or

    back tested results for any or all of this period are not acceptable); and 4. The firm’s Product must have a GIPS-compliant performance composite, and/or SEC-

    registered mutual fund product, that has the S&P 500 Index as its benchmark and:

    a. has a minimum of $1.0 Billion of assets under management in the Product as of June

    Page 3

IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

    Enhanced Cash Portable Alpha Investment Management Services RFP

    30, 2006;

    b. has an average annualized historical monthly information ratio (alpha before fees

    divided by tracking error) of at least 0.50 over rolling five-year periods between the

    period that starts with the inception date and ends with June 30, 2006.

C. SCOPE OF SERVICES

    The Manager will be required to provide the following scope of services to IPERS:

    1. Invest allocated funds in conformity with the investment policy and guidelines of the System,

    as defined in the contract established between IPERS and the firm. Provide discretionary

    management of the funds under the contract.

    2. Provide periodic reports and information relating to the firm’s investment strategy and other

    pertinent information pertaining to the investment of the System’s funds, as requested by

    IPERS. Provide monthly reports on portfolio appraisals, performance evaluation and

    attribution, and trading activities.

    3. Participate in public meetings on a periodic basis to provide information to the System

    concerning the investment performance of IPERS’ portfolio and the firm’s investment outlook

    and strategy for IPERS’ portfolio.

    4. Maintain a good working relationship with IPERS staff by providing timely information

    regarding material changes in the firm’s organizational structure, staffing, investment

    philosophies, and any other pertinent information IPERS staff may require in evaluating the

    performance of the portfolio.

The scope of services defined in the final contract between IPERS and the Manager will be binding and will

    supersede this section of the RFP if different from the scope of services defined here.

    Page 4

    IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

    Enhanced Cash Portable Alpha Investment Management Services RFP

    PART 2

    ADMINISTRATIVE INFORMATION

    A. INSTRUCTIONS FOR SUBMITTING PROPOSALS

1. Managers responding to this RFP must provide answers to the questions posed in Part 3 of this

    RFP. All proposals must be complete in every respect and must answer concisely and clearly

    all questions proposed by the RFP. Late proposals will not be accepted, and will be returned

    unopened to the Manager.

2. Proposals shall be submitted with a cover letter stating in the affirmative that the firm meets

    each and all of the minimum requirements listed in Part 1.B of this RFP, and that the firm

    is able and willing to provide the type and level of services required to fulfill the mandate

    proposed in this RFP. The cover letter and the offer made by the proposal, and any

    clarifications to that proposal, shall be signed by an officer of the offering firm or a designated

    agent empowered to bind the firm in a contract. The cover letter must also identify any sections

    of their proposal that the firm is identifying as confidential. (See Disclosure of Proposal

    Content below.)

3. Proposals should follow the order of questions as they are asked in Part 3 of this RFP. In

    response to each question asked in Part 3, restate the main question (denoted by a number or a

    letter) in bold font followed by your answers stated in regular font. Responses should be

    thorough and answer the specific question asked, (including the issues addressed in the bullet

    points following a question).

4. Supporting material must be clearly referenced to the appropriate question. Information and

    materials, which are strictly promotional in nature, should not be used. The submission of

    such material may serve to disqualify the firm from further consideration.

5. Verbal communication with IPERS staff during the selection process is greatly discouraged.

    Firms will be given the opportunity to submit written requests for clarification of questions or

    terms contained in the RFP. In all cases, verbal communications will not override written

    communications.

6. Proposals must be received at the IPERS Headquarters no later than 3:00 p.m. CST,

    October 13, 2006.

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    IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

    Enhanced Cash Portable Alpha Investment Management Services RFP

7. A firm must submit one (1) original proposal and seven (7) complete copies to IPERS and two

    (2) complete copies to Wilshire Associates, at the following addresses:

    Original and seven copies to: Two copies to:

    Iowa Public Employees' Retirement System Wilshire Associates

    7401 Register Drive 1299 Ocean Avenue

    P.O. Box 9117 Santa Monica, Ca. 90401

    Des Moines, IA 50306-9117 Attn: Eileen Neill

    Attn: Jeff Beisner

    In addition, the firm must e-mail a complete electronic version of its proposal to Wilshire

    Associates at mgrsearch.neill@wilshire.com and IPERS at investments@ipers.org.

    B. REJECTION OF PROPOSALS

1. Firms responding to this RFP must restrict their proposed investment structure to that specified

    in this RFP. Proposals offering alternate or substitute structures will be treated as not meeting

    the RFP's minimum requirements and will be rejected.

2. IPERS reserves the right to reject any or all proposals in whole or in part received by this

    request, due to noncompliance with the requirements of this RFP or for any other reason.

    IPERS will not pay for any information herein requested, nor is it liable for any costs incurred

    by the submitting Managers.

3. Managers whose proposals do not meet the minimum requirements will be so notified. After

    evaluation of the proposals, selection, and approval by IPERS, all Managers will be notified of

    the successful firm or firms.

4. IPERS reserves the right to not hire or to defer the hiring of a firm for these management

    services.

    C. DISCLOSURE OF PROPOSAL CONTENT The laws of Iowa require that the content of bidders'

    proposals be maintained in confidence prior to the issuance of a notice of intent to award a contract.

    If IPERS issues a notice of intent to award a contract at the conclusion of the selection process, the

    contents of all proposals, excluding confidential information, be placed in the public domain and be

    open to inspection by interested parties. Trade secrets or proprietary information that are

    recognized as such and protected by law may be withheld, but only if designation of such sections

    is stated in proposing firms’ cover letters and confidential information is clearly identified as such

    on each of the applicable pages within the body of the proposal.

Any proposal submitted which contains confidential information must be conspicuously marked on

    the outside as containing confidential information, and each page upon which confidential

    information appears must be conspicuously marked as containing confidential information.

    Identification of the entire proposal as confidential may be deemed non-responsive and disqualify

    the firm.

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    IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM Enhanced Cash Portable Alpha Investment Management Services RFP

    If the firm designates any portion of the RFP as confidential, the firm must submit one

    “excised copy” of the proposal to both IPERS and Wilshire Associates from which the

    confidential information has been excised. This excised copy is in addition to the number of

    copies requested in Part II.A.7 of this RFP. The confidential material must be excised in such a

    way as to allow the public to determine the general nature of the material removed and to retain as

    much of the proposal as possible.

    The firm’s failure to request confidential treatment of material may be deemed by IPERS as a

    waiver of any right to confidentiality, which the firm may have had.

    D. PROPOSAL OBLIGATIONS The contents of the proposal and any clarifications thereto

    submitted by the successful Manager shall become part of the contractual obligation and will be

    incorporated by reference into the ensuing contract.

    E. DISPOSITION OF PROPOSALS All proposals become the property of IPERS and will not be

    returned to the Manager. Notwithstanding the foregoing, if IPERS decides to terminate the

    selection process prior to the issuance of a notice of intent to award a contract, all proposals shall

    be returned in confidence to the bidders and no file copies shall be maintained by IPERS. Proposals

    that are received after the submission deadline will be returned to the Manager unopened.

    F. GRATUITIES

    1. The laws of Iowa provide that it is a felony to offer or promise to give anything of value or

    benefit to a state employee with the intent to influence that employee's duties. Evidence of

    violations of this statute will be turned over to the proper prosecuting attorney.

    2. IPERS provides reimbursement for transportation, lodging, meals and miscellaneous expenses

    for its employees.

    3. IPERS employees are subject to stringent statutory restrictions relative to acceptance of gifts,

    meals, lodging or transportation from any service contractor. Except for expenses associated

    with attending Manager-sponsored educational conferences, to the extent such expenses are

    covered by the Manager for its other clients, no meals or travel expenses may be provided or

    subsidized by a Manager for IPERS employees.

    G. IOWA STATUTES AND RULES The terms and conditions of this RFP and the resulting contract

    shall be construed in accordance with the laws of Iowa. Whenever differences exist between federal

    and state statutes or regulations affecting this procurement, interpretation shall be in the direction

    of that which is most beneficial to the interests of the State of Iowa.

H. SIGNATURE OF MANAGER'S AGENT The offer made by the proposal, and any clarifications

    to that proposal, shall be signed by an officer of the offering firm or a designated agent empowered

    to bind the firm in a contract.

    I. AWARD OF MANDATE IPERS reserves the right to award this contract not necessarily to the

    firm with the lowest fee or cost proposal, but to the firm which will provide the best match to the

    requirements of the RFP. The successful Manager or Managers will be determined in accordance

    with the evaluation criteria defined by IPERS.

    Page 7

    IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM Enhanced Cash Portable Alpha Investment Management Services RFP

    J. EVALUATION OF PROPOSALS An Evaluation Committee will meet to evaluate and score

    the proposals. Upon completion of the Evaluation Committee's evaluation, finalist interviews will

    be, and office visits may be, conducted with some candidate firms. Determination of whether to

    conduct interviews and which firms to interview is at the sole discretion of the Evaluation

    Committee. A determination to execute a contract may be made by the IPERS Investment Board

    without an interview, upon recommendation of the Evaluation Committee. IPERS’ Investment

    Board will make the final Manager selection(s).

    K. EVALUATION CRITERIA Proposals will be evaluated using the following criteria:

    I. The Firm’s Organization, Experience, and Staff Qualifications 30%

    II. The Firm’s Investment Style and Process 30%

    III. The Product’s History and Investment Performance 20%

    IV. The Firm’s Fee Proposal 10 %

    V. The Firm’s Resources 10%

    L. THE RESULTING CONTRACT The contract that IPERS expects to award as a result of the

    RFP will be based upon the proposal submitted by the successful Manager and this RFP. The

    contract between IPERS and the Manager shall be a combination of the specifications, terms and

    conditions of the RFP, including the terms contained in Part 4 of this RFP, the offer contained in

    the proposal submitted by the Manager, any written clarifications or changes made in accordance

    with the provisions herein, and any other terms deemed necessary by IPERS.

     Firms submitting proposals are urged to carefully read the contract in Part 4 prior to making their

    proposals. IPERS reserves the right to add provisions to the contract to be consistent with the

    Manager’s offer and to negotiate with the Manager other additions to, deletions from, and/or

    changes in the language of the contract, provided that no such addition, deletion, or change in

    contract language would, in the sole discretion of IPERS, affect the evaluation criteria set forth

    herein, or give the successful firm a competitive advantage. Firms should plan on such terms being

    included in any contract awarded as a result of this RFP.

     All exceptions to the proposed contract in Part 4 of this RFP must be clearly identified in response

    to question 3(I). Firms are cautioned that any exception submitted that will cause a failure to meet

    a mandatory requirement of the RFP will not be accepted. Prior to award, the apparent winning

    proposal(s) will be required to enter into discussions with IPERS to resolve any contractual

    differences before an award is made. These discussions are to be finalized and all exceptions

    resolved within one week of notification; if not, the firm’s proposal may be rejected and discussions

    may be initiated with other firms that submitted proposals.

     By submitting a proposal, each firm acknowledges its acceptance of these specifications, terms and

    conditions without change except as otherwise expressly stated in its proposal.

    M. TERM OF CONTRACT The contract shall be for a six-year period from the date of its execution.

    The resulting contract may be terminated at IPERS' discretion, with or without cause, after thirty

    (30) days written notice to the Manager.

    N. SCHEDULE OF EVENTS

    Page 8

    IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM

    Enhanced Cash Portable Alpha Investment Management Services RFP

1. September 22, 2006 - RFP IS ISSUED

2. October 4, 2006 - INQUIRIES - Inquiries and requests for interpretation or clarification of

    the RFP from potential bidders will be accepted only via e-mail. All inquiries must be if

    received no later than 3:00 p.m. CST, October 4, 2006. Firms must e-mail their inquiries to

    Wilshire Associates at the following address:

     mgrsearch.neill@wilshire.com

3. October 6, 2006 RESPONSE TO INQUIRIES - Responses to and addenda resulting from

    requests for interpretation shall be e-mailed to all RFP recipients no later than 4:30 p.m. CST,

    October 6, 2006

    4. October 13, 2006 PROPOSALS DUE The original proposal must be received at the

    IPERS Headquarters by 3:00 p.m. CST, October 13, 2006.

5. November 16, 2006 FINALIST INTERVIEWS - Members of the Evaluation Committee,

    and possibly members of the IPERS' Investment Board, may interview finalist firms in Des

    Moines, Iowa.

6. December 4, 2006 (Optional) MANAGER OFFICE VISITS - IPERS may choose to hold

    additional interviews at selected firms’ offices.

7. December 8, 2006 (Tentative) ANNOUNCEMENT OF SELECTION The System will

    notify all firms that submitted a proposal of its selection, which shall be subject to successful

    negotiation of a contract with the selected firm.

    Page 9

    IOWA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM Enhanced Cash Portable Alpha Investment Management Services RFP

    PART 3

    QUESTIONNAIRE

Note: Please completely respond to all questions and sub-questions. For instance, if question #5 has

    subparts a, b, c, etc., then respond to each subpart individually to better facilitate the Evaluation

    Committee’s review of your firm’s response.

The proposal must answer the following questions:

A. Minimum Requirements

    1. Is your firm a registered investment advisor under the Investment Advisors Act of 1940? If yes, provide

    the firm’s SEC File Number (e.g. 801-xxxxx) and attach a copy of the firm’s most recently filed Form

    ADV-Part II as Exhibit A to your proposal. If your firm is exempt under the bank exemption, please

    provide proof of such exemption.

    2. Is the firm willing to perform its services under a performance-based fee arrangement?

    3. Complete the table in Appendix I and include it in your proposal as Exhibit B. (Please provide Exhibit

    B as a Microsoft Excel spreadsheet in the electronic version of your proposal.) Answer the following

    questions regarding the information included as Exhibit B:

    a. Identify the market index used as the benchmark for the Product composite or SEC-registered

    mutual fund product.

    b. Do the total assets for the Product composite or mutual fund product exceed $1 billion for the

    quarter ending June 30, 2006?

    c. Has the Product performance composite been constructed, and returns calculated, in compliance

    with GIPS? If no, explain why. Has the composite performance been verified by an independent

    third party? If yes, provide a copy of their verification letter with Exhibit B.

    d. Provide as Exhibit C the annualized (gross-of-fees) returns of the Product composite provided in

    Exhibit B and its benchmark for the 10-year, 5-year, and 3-year periods ending June 30, 2006.

    4. Calculate and provide the average annualized historical monthly information ratio (alpha before fees

    divided by tracking error) over rolling five-year periods between the period that starts with inception and

    ends on June 30, 2006. Computation should be made by calculating the annualized alpha and tracking

    error for each rolling 5-year period, then calculating the information ratio for each 5-year period, then

    averaging the information ratios.

    B. Information Concerning the Firm

    1. Provide all of the following information:

    Name of Firm:

    Contact:

    Page 10

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