Chester County Retirement Board votes to drop Walter Scott, shift assets to Vanguard and increase private real estate

The Chester County Employees Retirement Board on Nov. 12 voted to terminate the county’s Walter Scott international growth mandate and reallocate the money into lower‑cost index and private real estate funds.

The board’s investment presenter told trustees the system returned 4.8% for the quarter (4.7% net of fees) and described concentrated performance drivers in large‑cap U.S. technology versus weaker results in non‑U.S. growth managers. “Walter Scott is a commingled fund…they’ve struggled mightily,” the presenter said and recommended, “terminate Walter Scott due to performance and put that money into the current Vanguard world ex‑U.S.” The board then approved a motion to terminate Walter Scott and transfer its assets to Vanguard in multiple tranches to minimize market timing risk.

The presenter clarified fee and scale comparisons during discussion: Walter Scott charges about 75 basis points and the report listed roughly $80,000 in fees per quarter on that mandate (the presenter confirmed the $80,000 figure was per quarter on a roughly $47,000,000 exposure). By contrast, the Vanguard world ex‑U.S. index fund cited in the presentation charges about 9 basis points, a substantial reduction in ongoing manager fees.

Trustees also approved a separate allocation shift into private real estate. The presenter reported the system’s market value recently exceeded $600 million and recommended rebalancing by moving roughly $4.5 million out of the Vanguard S&P 500 index holding into Prudential core real estate (and TA Realty) to move the portfolio closer to a 10% target in private real estate. The presenter characterized private core real estate as a conservative, income‑oriented allocation expected to generate roughly 7–8% annually and to reduce short‑term equity volatility.

A board member moved to implement the Walter Scott termination and Vanguard reallocation; the motion passed on an aye vote with no opposition. A later motion to move the specified S&P 500 dollars into the TA Realty/Prudential core real estate funds likewise passed unanimously.

During the meeting, a Penn Township resident, Jim D’Alessio, raised manager fee concerns and asked the board to consider retiree assistance or a cost‑of‑living adjustment for 2026 given the fund’s funding status (he said the fund is “funded over 80%” and estimated annual manager fees around $1.3 million). The board acknowledged his question and said staff would follow up.

The board’s next procedural steps for the manager changes include moving the Walter Scott assets out in tranches over the coming weeks to limit market impact, with staff estimating the full transition could take up to two months around year‑end liquidity considerations.

The meeting closed with trustees thanking Controller Margaret Reif, whose retirement it noted; no non‑agenda public commenters appeared, and the board adjourned.