In November, the CUIT Market Neutral Fund was closed. The decision reflected the difficult environment of low cash yields and the disappointing results posted by the Fund and by many quantitative equity managers since the financial crisis began in mid-2008. As prospects for traditional bond investing appear more favorable for the foreseeable future than do those for the Fund’s quantitative strategy, CBIS determined that closing the Fund was in the best interests of participants.
In early April, CBIS replaced Sands Capital Management as co-manager of the CUIT Growth Fund with Los Angeles Capital Management. The objective was to reduce the Fund’s tracking error versus its benchmark, the Russell 1000 Growth Index, without sacrificing return potential. Los Angeles Capital Management was founded in 2002, is independently owned by its employees, and manages about $4 billion in equity assets against a variety of indices using a primarily quantitative approach. Among the factors assessed in the stock selection process are: the relationship between projected and reported earnings, balance sheet strength, financing and investment decisions by management, and business risks. Portfolios are optimized to maximize excess return for a specified level of portfolio risk, using the Russell 1000 Growth Index as a benchmark, and with controlled exposure to industry and individual issue weights. We believe that this more tactical approach, with its higher turnover, will be more effective in an uncertain and volatile market than was the previous manager’s strategy.
We believe that this more tactical approach, with its higher turnover, will be more effective in an uncertain and volatile market than was the previous manager’s strategy.