The LACERA investment team recommended MSCI’s risk analytics over competitors including BlackRock’s Aladdin system and FactSet.

After a lengthy search, the investment team at the Los Angeles County Employees’ Retirement Association has settled on a new risk analytics provider.

The investment team has recommended that its board hire MSCI Analytics to provide total fund analytics for the $59.6 billion pension fund, according to the agenda from a LACERA investment board meeting held on Wednesday. MSCI beat out rivals including FactSet and BlackRock Solutions, the division of BlackRock which encompasses the asset manager’s Aladdin platform.

The agenda reveals how LACERA’s investment team decided upon MSCI Analytics, as well as what it found attractive about other risk management candidates that the pension fund considered during the search process. According to the document, MSCI’s advantages included the firm’s experience with public pension funds, suite of indices, and focus on analytics. MSCI proposed charging fees between $478,000 and $730,000, according to LACERA.

The hunt for a new risk system began in December 2018, when LACERA received board approval to initiate a search. After putting out a request for proposals, LACERA received seven responses, including six total fund risk management platforms, according to the agenda. The pension fund then narrowed the field by eliminating three potential candidates: Bank of New York Mellon, State Street, and Wilshire Associates.

According to the document, Bank of New York Mellon was dismissed in part because its product team had been formed within the last five years. State Street — LACERA’s previous provider — was dinged for its “heavy use of proxies, imprecise analytical output, [and] analyst/client service turnover.” Wilshire Associates didn’t pass muster, according to LACERA, because of the firm’s lack of audit review process, small product team, and limited client support hours.  

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