Asked by Variety how soon the Fund expects to transition to what they refer to as Modified Glidepath 2013 investment strategy, Fund administrator Richard S. Villagomez said, “In about 10 weeks.”
He said they have moved about $55 million to the Certificate of Deposit Account Registry Service.
Fund board chairman Sixto K. Igisomar told Variety, “We are transferring approximately $15 million dollars weekly.”
Igisomar also said they are trying to move whatever is allowable and whatever the banks can handle.
Asked on the number of the banks that would be involved in the process, Igisomar said, “There is a lot.”
Igisomar approximates that each of the banks involved would hold on the average $200,000 of the Fund’s money.
The Fund, by using the CDARS, is placing its money into certificates of deposits issued by other members of the CDARS network.
Deposits would only be made through banks insured under Federal Deposit Insurance Corp. with $250,000 as maximum insurance for deposits.
“It’s taking a while,” said Igisomar referring to the said transition to CDARS.
Based on the latest unaudited, unreconciled report, the Fund’s portfolio value was $261,224,598 as of Nov. 30.
Of the total portfolio, $55 million had already been moved to CDARS: $20 million in bonds and certificates of deposits and $35 million in cash and cash equivalents.
Approximately $182,026,560 or 69.68 percent of the portfolio still sits in total fixed income: $82,149,998 (38.23 percent of $261 million) in PIMCO total return and $99,876,563 (38.236 percent of the portfolio) in Vanguard short-term bonds.
It has $576,745 in international equities handled by Franklin Templeton.
The Fund still continues to liquidate its assets with J.P. Morgan. From the $19 million under J.P. Morgan’s management, it is down to $1,591,828.
The Fund board decided to move into this direction in October as it was left incapacitated to invest with the passage of the beneficiary derivative lawsuit act or P.L. 17-51 that drove away its investment consultant, actuary and money managers.
Its investment consultant Wilshire Associates was looking at staying on board if the Fund could obtain a restraining order to P.L. 17-51 but to no avail.
Since Oct. 12, the Fund has been operating without an investment consultant and has resolved to transition to a strategy called Glide Path.
In this strategy, the Fund liquidated its assets held by money managers and shifted to placing the money in CDARS — Certificate of Deposit Account Registry Service — affiliated financial institutions.
According to its enabling law PL 6-17 §8353 (a), the Fund may engage one or more investment agents to secure expert advice and counsel on investments with all costs incurred paid from the Fund.
Under §8353 (c) (6), the Fund should engage with an investment counsel who certifies in writing to the Fund board that the assets under its direct investment supervision are in excess of $200 million.
The law also requires the Fund, under §8353 (e), to not invest unless in the opinion of the investment agent that it is an appropriate investment for the Fund.
Without an investment consultant, the Fund is left with no other investment vehicle but cash.
In the interim, as the Fund moves to CDARS, it had put out an emergency request for proposals for investment consultant that closed on Nov. 14 and yielded four responses.
During Friday’s board meeting on Capital Hill, the Fund board of trustees and officials discussed in executive session if these proposals and if any of these would qualify.
Variety has yet to confirm if the board has found any qualified investment consultant.
In the event that the Fund hires a new investment consultant, the move to CDARS would be halted and the pension agency would adopt the investment strategy as recommended by its new investment consultant.
Igisomar on Friday they would discuss in executive session if all the submissions were responsive or not.
As for their RFP for actuary, Igisomar said they didn’t get any proposal.
Igisomar said they could not say with certainty if P.L. 17-51 was the only reason that they were not getting proposals.
“We will discuss further and evaluate in the executive session,” he said.
Porfolio value in fiscal year 2011
Based on unaudited report, Fund portfolio dropped from $319,501,077 on Oct. 31, 2010 to $267,166,896 on Sept. 30, 2011: $312.9 million, Nov. 2010; $321.125 million, Dec. 31, 2010; $321.52 million, Jan. 31, 2011; $327.207 million, Feb.; $324.965 million, March; $329.24 million, April; $321.855 million, May; $312.433 million, June; $306.78 million, July; $280.06 million, August; $267.16 million, Sept. 2011.
The portfolio continued to decline in fiscal year 2012.
It was $266.41 million on Oct. 30 and estimated to be at $261.224 million by Nov. 30.
According to Fund acting comptroller Pablito J. Amog, despite the gain in market values in October, investments decreased by $754,941 due to $4.48 million in withdrawals made from the investment to cover for shortfalls in pension payouts for the said month.
As of Nov. 2011, the Fund had withdrawn $3.95 million from its portfolio bringing the total withdrawals for FY’12 to $8.43 million.
In FY’11, the Fund had withdrawn about $52.223 million
Cost of Living Allowance
The comptroller also reported to the board that the Department of Finance had remitted $288,444.26 as payment for COLA for the first through the third quarter of fiscal year 2011 and had been deposited in TCD at Bank of Guam.
He said that the amount had been paid as an annual retirees bonus or ARB and was issued to the retirees for their pay period ending Nov. 30.
Judiciary owes Fund $1.2 million
The reserve account for payments to the loan that helped defray the cost of constructing the judiciary building in Susupe has $563 only.
Fund administrator Richard S. Villagomez told the trustees on Friday that the loan was 10 months behind, lagging at $120,000 per month or $1.2 million.
The $13.8 million loan agreement between the judiciary and the Fund that was guaranteed by the Administration called for a three-month reserve of $118,000 per month in that reserve account.
Although the judiciary remits collections from fees to the Department of Finance, the latter has yet to replenish the judicial building loan reserve account.
Villagomez informed the board that he had written to Sec. Larissa Larson and to the Attorney General Edward Buckingham about this.
