BROAD AGENCY ANNOUNCEMENT
PASSIVE DOMESTIC SOCIALLY RESPONSIBLE INVESTING EQUITY FUND
INDIANA DEFERRED COMPENSATION COMMITTEE
Solicitation for
INVESTMENT MANAGEMENT SERVICES
to the
State of Indiana Public Employees Deferred Compensation 457/401(a) Plans
Proposal Due Date: Wednesday, October 18, 2017 – 5:00 p.m. Eastern
Please read the BAA in its entirety.
The Indiana Deferred Compensation Plans, through this Broad Agency Announcement (BAA), are requesting proposals for the passive Domestic Socially Responsible Investing (SRI) Equity space. The Deferred Compensation Committee (Committee) is charged under Indiana Code 5-10-1.1 with approving proposed funding offerings for the state employees’ deferred compensation plans. The Auditor of State, under the same statute, provides for the administration of the Plans. Empower provides recordkeeping and educational services for the Plans. The Committee has retained Capital Cities, L.L.C. to provide ongoing investment consulting services and assistance with this search.
This BAA is intended to publicize the availability of contracting opportunities for services described herein. This is not an Invitation for Bid, nor is it a Request for Proposal under Title 5, Article 22, Chapter 9 of the Indiana Code (IC 5-22-9). The State of Indiana creates no obligation, expressed or implied, by issuing this BAA or by receipt of any responses submitted pursuant hereto. The award of any contract(s) as a result of this BAA shall be at the sole discretion of the Committee. Neither this BAA nor any response (“proposal”) submitted hereto are to be construed as a legal offer.
CONFIDENTIAL INFORMATION
Potential respondents are advised that materials contained in proposals are considered by the Committee to be subject to the Indiana Public Records Act, IC 5-14-3 et seq., and after the contract award may be viewed and/or copied by any member of the public, including news agencies and competitors. Potential respondents claiming a statutory exception to the Indiana Public Records Act must clearly mark all documents “Confidential” and indicate on their e-mailed proposal that confidential materials are included and, in their cover letter, specify which statutory exception provision applies. The Committee reserves the right to make determinations of confidentiality. If the Committee does not agree that the information designated is confidential under one of the disclosure exceptions to the Public Records Act, it may either reject the proposal or discuss its interpretation of the allowable exceptions with the respondent. If agreement can be reached, the proposal will be considered. If agreement cannot be reached, the Committee will remove the proposal from consideration for award and return the proposal to the respondent upon request. The Committee will not determine price to be confidential information.
PROPOSALS
Firms interested in providing these services to the Plans should submit their response by e-mail to Capital Cities at .
Proposals must be received no later than 5:00 PM Eastern on Wednesday, October 18, 2017. Proposals received after 5:00 PM, as indicated by the electronic time/date stamp of Capital Cities’ mail server, shall not be considered. Capital Cities will respond with confirmation of receipt by 5:00 PM Eastern October 20, 2017. If you do not receive confirmation, please contact Capital Cities immediately.
The subject of the response should be titled:
“Manager Name - RESPONSE TO INDC SEARCH”
Firms may submit more than one response. A separate proposal shall be submitted for each mandate. Each proposal shall designate one person as the principal contact for the responding firm.
Any questions regarding this BAA must be submitted by e-mail only to no later than 5:00 PM Eastern on Monday, October 2, 2017. Responses to all questions will be prepared in writing and posted online at www.hoosierstart.in.gov by COB October 6, 2017.
ALL INQUIRIES MUST BE SUBMITTED AS DESCRIBED ABOVE. ANY DIRECT SOLICITATIONS OF THE COMMITTEE OR ANY AGENTS OF THE FOREGOING WILL BE VIEWED UNFAVORABLY AND MAY DISQUALIFY BIDDER FROM FURTHER CONSIDERATION FOR A CONTRACT AS A RESULT OF THIS BAA. QUESTIONS ASKED OVER THE PHONE AND/OR SENT VIA EMAIL TO AN ADDRESS OTHER THAN WILL NOT BE ADDRESSED.
MINIMUM QUALIFICATIONS AND SCOPE OF WORK
The Plans are requesting proposals for a passive Domestic SRI Equity fund. Though the preference is for a passive domestic mid/large cap broad or large cap broad SRI equity fund, all passive SRI equity funds will be considered.
The total Plans’ market value is approximately $1.16 billion. Currently, the Plans offer participants an active SRI equity investment option on a stand-alone basis. This investment option accounts for a total of $21 million in assets as of June 30, 2017. The Committee anticipates mapping the current SRI equity assets to the new passive domestic SRI equity investment option.
Firms must be registered as investment advisors with the Securities and Exchange Commission under the Investment Advisors Act of 1940. All vehicle types will be considered; however, mutual fund and collective investment trust vehicles are preferred given the product must support daily valuation and any other contractual requirements of the recordkeeper as outlined in Exhibit A. Candidates should be able to demonstrate that they manage material assets ($500 million or more) in the area for which it competes. Organizations with less than $500 million in the area for which it competes will be considered on a case-by-case basis. Additionally, it is desirable that the investment process have a track record of a minimum of three years in the manner in which it is operating currently.
EQUITY INVESTMENT MANAGEMENT SERVICES QUESTIONAIRRE
Responses must be in chronological order of the questionnaire. Each response must be referenced by number to the underlying question. Please do not include any pre-printed marketing material.
Please be succinct in your answers. Thank you for the time you and your organization will expend in responding.
QUESTIONNAIRE
Name of Proposed ProductVehicle
Ticker (if applicable)
Index
I. IDENTITY, FIRM and ADDRESS of PRINCIPALS
q A. Name of firm(s).
q B. Name, address, telephone numbers, fax and email address of key contact.
q C. Please provide a brief history of the firm, including where your firm is headquartered.
q D. Is your firm: (1) Independently owned and operated; (2) Limited or master partnership; (3) Part of a publicly traded company; (4) Affiliated with an insurance company; (5) Affiliated with a bank; or, (6) Affiliated with a brokerage firm?
q E. Have any lawsuits or regulatory actions been taken against the firm, its executives or its principals in the last three years?
q F. Please state whether, during the last 10 years, any regulatory agency has conducted an audit or review of the firm. If so, what was the outcome? Discuss any significant findings?
q G. Does your firm legally qualify as a minority-owned or majority women-owned firm?
q H. Does your firm or parent firm have an interest in a securities brokerage firm?
q I. Does your firm have E&O Insurance? If yes, please provide the amount of coverage.
q J. Is your firm compliant with the Global Investment Performance Standards (GIPS®) of the CFA Institute (formerly AIMR-PPS)? Please provide the date of compliance.
q K. Provide the name of the external accounting firm auditing your performance.
q L. Please address any organizational changes your firm has experienced within the last three years. Are there any anticipated organizational changes for the next year?
q M. Does your firm meet the criteria of an Indiana business established by the “Buy Indiana” language found at http://www.in.gov/idoa/2736.htm? Please note you are not required to meet the criteria to respond to the BAA.
II. BUSINESS FOCUS
q A. Breakdown the total passively managed assets by the firm within the following asset classes as of 6/30/17.
Asset Class / # of Acts. / Assets $(mm)Passive Domestic Equity
Passive International Equity
Passive Balanced
Passive Fixed Income & Cash
Total
q B. Breakdown the total firm assets within the following client types as of 6/30/17.
Client Type / # Acts. / Assets $(mm)Public
Corporate
Endowment/Foundation
Multi-Employer
Mutual Fund
Other
Total
III. PRODUCT INFORMATION
q A. Provide the product name, ticker (if applicable), fee and minimum, and inception date for each of the vehicle types (e.g. different share classes of mutual funds, commingled trusts, separate account, etc.) available for this particular product/strategy.
Product Name / Ticker(if applicable) / Fee / Minimum / Inception Date
q B. Does the product meet the record keeping requirements as set forth in Exhibit A?
q C. For the strategy you are proposing, provide the total assets under management and the number of accounts in the product within the following account types for each of the last five calendar years and YTD 6/30/17.
YR
/ Investment Vehicle / # of Accounts / Assets $(mm)YTD 6/30/17 / Mutual Fund
Non US Sep/Com
US Tax-exempt Sep/Com
US Taxable Sep/Com
TOTAL
12/16 / Mutual Fund
Non US Sep/Com
US Tax-exempt Sep/Com
US Taxable Sep/Com
TOTAL
12/15 / Mutual Fund
Non US Sep/Com
US Tax-exempt Sep/Com
US Taxable Sep/Com
TOTAL
12/14 / Mutual Fund
Non US Sep/Com
US Tax-exempt Sep/Com
US Taxable Sep/Com
TOTAL
12/13 / Mutual Fund
Non US Sep/Com
US Tax-exempt Sep/Com
US Taxable Sep/Com
TOTAL
12/12 / Mutual Fund
Non US Sep/Com
US Tax-exempt Sep/Com
US Taxable Sep/Com
TOTAL
q D. Breakdown the number of accounts and assets gained and lost for each of the past five calendar years ending 12/31/16 and YTD 6/30/17 in the product. Please speak to any material asset loss or gain within the product.
YR
/ # of Accts. / Assets $(mm) / # Acts. Gained / $ Gained (mm) / # Acts. Lost / $ Lost(mm)
YTD 17
12/16
12/15
12/14
12/13
12/12
q E. Please provide the number of total dedicated passively managed strategy personnel and provide the turnover of dedicated passively managed strategy personnel for the following time periods. Please speak to any material changes in personnel.
6/30/17 / 12/31/16 / 12/31/15 / 12/31/14 / 12/31/13 / 12/31/12Total
Gained
Lost
q F. Does the product you are proposing participate in securities lending? If so, please describe.
q G. Describe your product’s replication methodology (e.g., full replication, optimization, etc.).
q H. Describe your approach to SRI. Please provide a comprehensive list of the SRI factors to which your product screens (both positive and negative).
q I. Does a third party determine the list of factors on which the product screens SRI factors? If so, please identify that group and elaborate on their process.
q J. Does your strategy qualify as an ESG compliant?
q K. Provide the 6/30/2017, minimum, maximum and average weights (over the past year) of the following portfolio characteristics.
Characteristic / 12/31/16 % / Min % / Max % / Ave %Wtd Ave Market Cap
Wtd Ave Median Mkt Cap
Percent Large Cap (>10 Bil)
Percent Mid Cap (2-10 Bil)
Percent Small Cap (<2 Bil)
Price/Earnings Ratio
Price/Book Value
Price/Free Cash Flow
Wtd Ave Dividend Yield
5YR Forecasted Earnings Growth
5YR Historical Earnings Growth
Number of Securities
Annual Percent Turnover
% Top Ten Holdings
q L. Are there any inherent biases (i.e., size or style) embedded into the strategy?
IV. PERFORMANCE
q A. For the equity style under consideration please provide the following information about your product’s performance:
Ø 1. Is the performance history submitted consistent with the Global Investment Performance Standards (GIPS®) of the CFA Institute (formerly AIMR-PPS)? Please provide date of compliance.
Ø 2. In the attached Excel spreadsheet, please provide quarterly results for the last 41 calendar quarters or since inception (whichever is shorter). (Gross of fees if separate account product, net of fees if a commingled trust or mutual fund product)
RESPONSE TO THIS QUESTION MUST BE SUBMITTED IN THE EXCEL FILE PROVIDED (i.e. NOT ADOBE ACROBAT OR READ ONLY). THE EXCEL FILE CAN BE FOUND AT: www.hoosierstart.in.gov
q B. Provide details regarding any time period where material tracking error occurred within the product you are proposing.
V. OTHER
q A. Discuss any liquidity restrictions on the proposed product at either the participant or plan level.
q B. Is there anything else you would like us to know about your firm that was not covered in the previous questions? (limit one page)
SELECTION PROCESS AND CRITERIA
All proposals will be reviewed and evaluated based upon the proven ability of the proposer to satisfy the requirements and expectations of the announcement in a cost-effective manner that is in the best interest of the Plans. Through the selection process, the Committee reserves, at their discretion, the right to: (i) not select any proposal, (ii) select any portions of a particular proposal for further consideration, or (iii) accept a proposal other than the lowest cost proposal.
EQUAL OPPORTUNITY COMMITMENT
It is the public policy of the State of Indiana, at all levels of state government, to promote equal opportunity in employment and in contracting opportunities, and to promote and encourage the participation of minority, small, and other disadvantaged business entities in employment and contracting opportunities involving the State of Indiana as fully as possible. The State of Indiana is, therefore, committed to pursue such avenues in its employment and contracting activities which will further the goals of this public policy. Similarly, a demonstrated commitment consistent with the goals of this public policy by those whom the State of Indiana does business, including those offerors responding to the solicitation, is highly desirable by the State of Indiana.
Exhibit A
Recordkeeper Requirements
1) The vendor must send price/dividend information to NSCC (mutual fund profile) by 6:30 pm EST. As a back-up, the vendor must be able to send price/dividend information via e-mail/fax by 6:30 pm EST.
2) The vendor must accept trades on behalf of Empower from NSCC (FundSERVE) by 6:30 a.m. EST (T+1 trading). In the event that trades are not done through the NSCC, the vendor must accept trades by 8:00 a.m. EST (T+1 trading).
3) The vendor must process trades at the prior day’s closing NAV if provided to them the following business day.
4) The vendor must provide daily share positions to Empower Treasury for reconciliation purposes.
5) The vendor must accept wires before the market closes for purchase trades sent the same day.
6) The vendor must send wires before the market closes for redemption trades sent the same day.