Massachusetts' $50.6 billion state pension fund fired five money managers on Wednesday, including the Legg Mason ( LM) fund overseen by investment guru Bill Miller, due to poor performance.

The fund's board approved the transfer of about $1.4 billion from the firms -- including Legg Mason Capital Management, Ariel Investments, NWQ, Mazama Capital Management and Gardner Lewis -- into State Street Global Advisors, which is run by State Street ( STT), according to news reports. State Street will link the assets to the Russell 3000 index portfolio.

Another $400,000 will be transferred to a fund-of-hedge-funds portfolio. The board also approved a $300 million inflation-linked bonds mandate to BlackRock ( BLK).

The pension fund report cited "inconsistent performance" and a "high level of tracking error" as reasons for the asset shift. Legg Mason's fund has posted particularly weak results due to its investments in the struggling financial sector.

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