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Norwalk Pension Board reviews international equity, eyes moving $40M from Silchester into passive sleeve
Summary
Board heard consultants propose reducing Silchester’s outsized influence in the non‑U.S. equity portfolio and discussed interim moves of roughly $40+ million into a passive EPHA core sleeve while searching for growth managers or implementing other mixes.
The Norwalk Pension Board spent the bulk of its April 8 meeting reviewing the international (non‑U.S.) equity structure and weighing whether to shrink Silchester’s outsized weighting in favor of a passive core sleeve.
Consultants told the board Silchester has a deep value and small‑cap bias and currently represents about 55% of the plan’s non‑U.S. equity allocation, generating a disproportionate share of selection risk in the portfolio. Brett (consultant) said that when Silchester’s weight is "so large, it's going to skew the entire international equity portfolio," and presented alternative mixes ranging from keeping the current active lineup with a new growth manager to introducing a 50% passive EPHA core sleeve or moving to a fully passive implementation.
Lindsay Jones (consultant) reviewed the mechanics: under a hypothetical style‑neutral rebalance, Silchester would be trimmed substantially (consultants modeled a cut from ~55% to roughly 30% in one scenario) and the plan could allocate a passive sleeve to dampen volatility and reduce fees. Board members reported general agreement with a preliminary plan to move about $40 million out of Silchester into an EPHA passive sleeve as an interim, liquid option while further manager searches and analysis proceed.
The board discussed liquidity constraints (Silchester monthly with ~10 business days notice; Walter Scott typically daily) and fee comparisons (examples discussed: BlackRock ~35 bps, Walter Scott ~70 bps, Silchester shown in analysis around 68 bps). Staff and consultants said they will return next month with candidate passive providers and updated quarterly performance to support any implementation decision. No final manager hires or firings were approved at the meeting.
Next steps: staff to present passive manager options, updated performance through the first quarter, and simulations of alternative mixes for the board’s next meeting.
