Smaller Asset Managers Pilot Program – US Core Fixed Income Solicitation No. PBGC01-RP-15-0025
Pre-bidder’s conference - June 8, 2015 Submitted Questions and Answers
These questions were submitted after the pre-bidder’s conference held on Monday, June 8, 2015. Please see the conference video, located on www.fbo.gov, to view the question and answer period that took place at the conclusion of the event.
Question 01: The minimum qualifications indicate that the firm must have at least $250 million in AUM in the Core Fixed Income product. We currently manage approximately $200 million in a stand-alone, institutional Core Fixed Income strategy; in addition to that, we manage nearly $1.9 billion in Investment Grade securities across Core Plus, Core styles such as Core High Quality and Core Government Credit, Global, and our Core SMA/Wrap account product. Would we qualify based on the aggregation of these assets across products or is it required to be in one institutional strategy?
Answer 01: For the purposes of this solicitation, the PBGC will accept all assets as product assets if the products are active, multi-sector US core fixed income. For example, US Core Plus and US Core High Quality would be included in the product Asset Under Management (AUM). Carve outs like a fixed income portion of a balance accounts will not count as product AUM.
Question 02: What is the AUM definition of a small manager? If our firm had $20 Billion in AUM but less than $1Billion in fixed income AUM, would we qualify?
Answer 02: The purpose of the Smaller Asset Manager Pilot Program is to open the competition to smaller firms that have been precluded from previous searches conducted by PBGC. No
determination will be made on small managers and there is no assets under management (AUM) maximum included in the solicitation. All firms regardless of their size must meet the product AUM requirement to qualify.
Question 03: For the requirement of at least one $25 million tax-exempt investor, does that have to be a client benchmarked against the Aggregate Index, or can it be benchmarked against the
Intermediate Index?
Answer 03: The requirement of at least one tax-exempt institutional investor with a minimum of $25 million will be restricted to the proposed product only.
Question 04: As to Information Ratio requirement, if firm has 10-year record, but Senior PM has 5-year record with the firm, which would you care about?
Answer 04: The PBGC requests the average rolling 36-month information ratio for the previous 10 years or since inception, whichever is shorter. We want the firm record.
Question 05: The firm manages over $700 million in assets on a customized basis, including fixed income, but does not have a pre-constructed “product”. We usually respond to client’s requests for certain kind of portfolios. We do have a combined institutional account of approximately $33 million involving equity and fixed income. Not sure if we have a GIPS performance history for a pre-existing fixed income account. Can we still meet the “product mandatory request?
Answer 05: For the product AUM, a bidder needs $250 million in US multi sector fixed income funds to quality. You cannot count the fixed income in a balance portfolio (carve out) as fixed income assets. To qualify for this specific procurement you need a product with at least 5 years of live performance history.
Question 06: Will consideration be given to passive managers for this Fixed Income search? Or is it just active managers?
Answer 06: Consideration will only be given to Active managers.
Question 07: I'm interested in determining if the PBGC's Small Asset Manager Pilot Program would support a Service Disabled Veteran Owned Small Business (SDVOSB) start up fund that is structured under the Small Business Administration Mentor Protege program?
The Mentor would be an asset manager with significant (multi-billion) AUM, a strong supporting track recorded and a well developed investment team. The Mentor would most likely be Southern California based fixed income asset manager.
My background includes over 12 years in merchant banking, investment banking and asset
management experience. Of those 12 years, 8 of them were spent in institutional asset management in fixed income funds. I've invested in distressed debt, special situations debt, high-yield, investment grade and bank debt. Additionally, I was head trader for several years at one of those funds.
Answer 07: SDVOSBs and all other small business entities that meet the mandatory requirements of the solicitation are encouraged to participate. At this time, PBGC is looking for bond managers and not any fund to fund relationship.
Question 08: It is our understanding that an ERISA fidelity bond must equal 10 percent of the funds handled by a trustee or fiduciary with a minimum limit of $1,000 per plan and a maximum limit of $500,000 per plan. Plans holding employer securities are required to carry a maximum limit of $1 million. It is also our understanding that you are looking for a separate account, in which case the custodian will hold the securities, not the investment manager. Based on this scenario, we can meet a $500,000 ERISA fidelity bond requirement and currently do for other clients, but we cannot obtain a $1 million ERISA fidelity bond because we do not hold our clients’ securities.
Answer 08: The $1 million exception to the $500,000 maximum bond amount is for any plan that includes its own securities. Even though the custodian is technically holding the securities, the
advisor is the fiduciary to the plan and the Department of Labor has ruled that all fiduciaries must have this bonding.
Question 09: 1.) With respect to GIPS Compliance, our firm calculates some of our strategies' performance based on the GIPS standards, but we are not certified GIPS compliant at this stage given our size as well as the number and complexity of accounts. Will this preclude us from being eligible for selection?
2.) Would you be open to a pure structured credit (non-agency RMBS) portfolio? Our firm has the ability to run a separate account in non-agency RMBS, an area within fixed income in which we believe investors will receive the best risk-adjusted return in today's environment.
In other words, would you be open to a mandate with one specific asset class, such as non-agency RMBS, as opposed to a core fixed income portfolio (which is typically comprised of corporates, agencies, mortgages, etc.)?
3.) We are vehicle agnostic, so our strategy AUM meets the minimum criteria for non-agency RMBS but we run both SMAs and LP structures. Will an aggregate of the vehicles be sufficient to meet the product AUM minimum of $250 million?
Answer 09:
1) The PBGC requires that all performance data are GIPS compliant.
2) The Smaller Asset Manager Pilot Program is focused on multi-sector, US Core Fixed Income products and will not accept single sector products for consideration.
3) For the purposes of this solicitation, the PBGC will accept all assets as product assets if the products are active, multi-sector US core fixed income. For example, US Core Plus and US Core High Quality would be included in the product Asset Under Management (AUM). Carve outs like a fixed income portion of a balance accounts will not count as product AUM.
Question 10: What if we have questions about the RFP/Solicitation after it is posted to fbo.gov? Answer 10: There will be an approximately 14 day question and answer period after the RFP has been released (refer to the RFP for more information). Potential offerors may submit questions as noted in the solicitation and those questions, and the responding answers, without identifying who asked the question will be posted on FedBizOpps.
Question 11: Would interested parties receive automatic notices in the event that the solicitation is amended or additional information, such as Questions & Answers are uploaded to the FBO website?
Answer 11: The answer is yes. However, once registered and viewing the synopsis/solicitation page, the user must click “Watch This Opportunity”, which will prompt FedBizOpps to send notices to the registered e-mail as additional information is uploaded and changes to the synopsis/solicitation are made.
Please find below the step-by-step instructions for Vendors and Citizens (Individuals) on how to register on www.fbo.gov and receive automatic updates to the Smaller Asset Managers Pilot Program synopsis/solicitation.
1) On the home screen of www.fbo.gov, besides the Vendors/Citizens log-in, click on the “Register Now” link.
2) The following screen will request that a DUNs Number to be entered. This is not required for Citizen registrations and should click “Skip This Step.” Interested Vendors should enter the DUNs Number and click “Proceed.”
3) This following screen will request “Company Information.” These fields are required for Citizen registrations. Recommend using either the Office’s or Individual’s name/address for the required fields. Once completed the user should click “Proceed.”
4) The following screen will direct the user to enter their personal information. Once the required fields are completed, the user should click “Proceed & Review.”
5) At this time, the user will be requested to review the information that has been submitted. If correct, the user should click “Submit.”
6) Once submitted, the user will receive an e-mail requesting that they validate the account. The user should click on the link provided in the e-mail, which will bring the user to the login screen and will be prompted to enter their username and password. Once entered the user should click “Go” to login.
7) Once logged in, the user will be prompted to review the FBO Terms and Conditions. The user should review and click “Accept.” This will bring the user to the My FBO Home Screen. Once there, enter the solicitation number “PBGC01-RP-15-0025” within the “Keyword/Solicitation #” field of the “Quick Search” and click “Search.”
8) The following screen will contain link to the Smaller Asset Managers Pilot Program synopsis/solicitation and the user should click on the link.
9) This will bring the user to the synopsis/solicitation page. The user should click “Watch This Opportunity,” which will prompt FedBizOpps to send notices to the registered e-mail as additional information is uploaded and changes to the synopsis/solicitation are made.