Pension boards vote to exit Brandywine, move Russell 1000 value allocation to Vanguard Equity Income

The Cocoa Beach Police and Fire pension boards voted Aug. 4 to terminate their allocation to manager Brandywine and immediately purchase Vanguard Equity Income with the proceeds, following a recommendation from their investment consultant, Mariner.

Mariner representatives Carrie and James Reno told the boards that Brandywine, a quantitative large-cap value manager, has underperformed in recent periods amid organizational changes and model adjustments. "I would fully liquidate Brandywine," Carrie said, adding her recommendation was to move the funds into Vanguard Equity Income because it is low-cost, diversified and ETF-liquid. Board members pressed Mariner on concentration risk from placing the full allocation into a single value fund; Carrie said Vanguard holds several hundred positions and that alternatives could be presented at the next meeting.

The police and fire sides each moved and seconded the proposal and recorded voice votes in favor. The boards instructed Mariner to implement the transfers promptly; Carrie said letters and implementation steps would be provided in short order. The boards also requested that, at the next meeting, Mariner return with alternative value-manager options and a diversification plan.

Mariner noted the Vanguard vehicle is ETF-format and daily liquid, so selling and purchasing can be effected quickly; Carrie said there are no upfront purchase or redemption fees beyond market execution and ongoing management fees. The move follows Mariner's broader portfolio review, which highlighted near-term struggles among some domestic large-cap managers and an overweight to illiquid real estate that has pressured returns.

The boards' vote resulted in immediate instructions to execute the transition. Mariner said it would send the necessary letters and carry out the trades to exit Brandywine and allocate to Vanguard Equity Income.