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Investment committee places one active US small/mid-cap manager on watch; TA Realty funded $15 million
Summary
Kellen LLC presented April and quarter-end performance analysis; the investment committee placed an active small/mid-cap US manager on watch (AB) and the trust funded a $15,000,000 initial subscription to TA Realty to restore real estate allocation.
Kellen LLC reported to the City of El Paso Employees Retirement Trust on April performance and the quarter ended March 2025, and the board’s investment committee summarized several recent portfolio decisions.
Kellen representatives told trustees that markets were volatile in April following tariff announcements that produced a sharp correction and subsequent rebound. The firm said international equities have been a notable diversification benefit year to date, while certain US small- and mid-cap mandates underperformed during the recent drawdown.
The investment committee reviewed performance and decided to place one active US small- and mid-cap manager (AllianceBernstein, referenced in the discussion as “AB”) on heightened monitoring; the manager will now report twice a year to the investment committee while staff and consultants continue performance review. Kellen reported that TA Realty received an initial subscription of $15,000,000 in early April, which restored the trust’s real estate allocation closer to target. Kellen also noted a new private equity secondary fund (referred to as Passive 5 in the meeting) had called part of its commitment and provided early positive marks.
Kellen said fixed income managers BlackRock and Wellington were core-plus strategies with some below-index performance from higher-yield components in stressed markets, and that the trust’s private equity valuations have been supported by the denominator effect relative to public equity declines. Cash remained at about $12,000,000 to meet near-term benefit payments, Kellen reported.
Kellen recommended continued rebalancing to the long-term asset allocation and said no corrective governance actions were necessary at this time. The investment committee will continue to monitor underperforming managers and consider international-equity implementation alternatives during upcoming meetings.
Trustees asked a range of market questions; no formal board votes were recorded on Kellen’s recommendations during the meeting.
