Pension board terminates Wellington Management

The Massachusetts state pension fund dismissed Wellington Management as manager of a $163 million portfolio as the state reduced its exposure to real estate investments.

The pension board voted at a meeting today to terminate Wellington, an elite Boston investment firm, in its role as manager of real estate investment trusts for the $37.8 billion pension fund. Wellington's portfolio lost 46 percent last year, compared to 37 percent for its benchmark index.

Beyond last year's poor performance, the state fired Wellington because it is trimming its holdings in real estate investment trusts - to 2 percent from 3 percent of total assets - and shifting those investments to be more global, according to Michael Travaglini, executive director of the pension fund board. Fifty percent of the REIT assets will now be in global real estate securities, up from 30 percent in the past.

European Investors Inc., a New York firm, was hired to replace Wellington. Lisa Finkel, a spokeswoman for Wellington, declined to comment.

Travaglini said the Wellington style in that particular fund is to concentrate heavily in 15 to 20 securities. The style had performed better in the past, he said, but it is volatile and fared poorly in 2008. He stressed that the dismissal had as much to do with the reallocation as with the short-term returns.

"We're directionally shifting,'' Travaglini said, to be 50 percent in US assets, 50 percent non-US.
(By Beth Healy and Casey Ross, Globe staff)