It is widespread concern among fixed-income investors that market-cap-weighted bond indices tend to reward the biggest borrowers.

“The more money, for example, that Spain and Italy borrow, the larger that component becomes of this type of index,” McKenna says. “So, if our managers closely follow the benchmark, the larger our members and our funds will be exposed to that [the biggest debtors], and that is not clearly not a desirable place to be. So, while we created this structure really to deal with what was a credit issue back in 2007, it is going to help us with the sovereign debt issue in 2012.”

In its global bond portfolio GESB awarded Wellington Management Company $708 million and Franklin Templeton Investments $708 million.

Wellington also received $432 million to manage as part of the global investment-grade bond portfolio, along with Pimco Australia, which received $427 million to manage.

McKenna was appointed to the role as acting-chief investment officer in March after the February departure of Sharon Hicks.

The departure of Hicks comes as the latest change in senior management at the fund, with chief executive officer Howard Rosario starting in the role at the end of January.

McKenna says that the fund’s board was continuing its search for a chief investment officer and that no decision on the appointment had been made yet.