Hobson has utilized the same fixed income manager for the last decade, but there are potential signs of trouble in the paradise of this long term relationship. The manager’s recent performance has suffered, while its ownership structure has changed. An RFP is issued, but how can the multiple factors in the decision be carefully balanced? Does a multiple manager strategy make sense? These and other important questions are discussed.

Belichik Mutual’s Board of Directors numbers eight familiar individuals with close ties. Despite a good long term record, investment manager performance over the last few years has been below benchmark. This deflating experience has been compounded by whispers of less than ethical behavior at the manager. This case is a role play, where each Board member is given information about their background and biases. Should the manager be changed? Why or why not?

Over the last ten years, Kiev Mutual has had one fixed income management firm and the same relationship manager from that firm. Recently, that individual defected to another investment manager and the long term ‘chemistry’ in the relationship seemed to suffer, despite consistent performance. Another issue, appropriateness of the benchmark, has also been raised. Should a ‘fiduciary’ search be launched? Should the performance benchmark be reconsidered?

Spondulicks Mutual has enjoyed a long term partnership with its investment manager, but there is Board concern about using only one manager, as well as a discussion about implementing dynamic versus static asset allocation. Based upon the information provided, what do you think about the Board’s decisions? Does it make sense to authorize an ‘expert’ to act within the authority of the investment policy in a dynamic allocation framework?

A successful, well-capitalized insurer has outsourced its fixed income management and investment accounting function to one manager for the past twelve years. Recent performance has suffered versus peers, and credit losses on formerly AAA- rated securities have not helped matters. So, an RFP is issued to a large, mid-sized and small manager, as well as the incumbent. What decision did they make? What decision would you have made?