In an interview last Wednesday, Board of Trustees Chairman Sixto K. Igisomar said, “The Retirement Fund has decided on having a new asset allocation. Based on that new asset allocation, the current money managers that we have may potentially lose the contract with the Retirement Fund based on the new asset allocation.”
Igisomar said the Fund is in the middle of a transition.
The Fund chairman said he set the deadline for April.
“I gave them a deadline. I want to know where I am going by April. Obviously, this is a very tight deadline. We need to make a quick decision and — at the same time — allow time for them to focus on the RFP. By April I should be able to have a final response,” he said.
He said an ad hoc committee was formed to evaluate the proposals of the money managers.
The committee, he said, was composed of all the trustees and chaired by Marian DLG. Tudela.
Tudela reported to Igisomar and the board the committee’s recommendations.
The committee had already been dissolved after they came back with the response and after they accomplished what they were tasked to do, said Igisomar.
“We received almost 100 (applications.) We went through elimination, and review was done by the board and the financial consultant. Now we are going to be reviewing 15-20 [money managers] possibly,” Igisomar told Variety.
Variety asked Igisomar on the changes that the board sees fit with money allocations, but he declined to offer details saying, “We are being careful not stating what that new allocation is because we are going through an RFP. Currently we have money managers on board and the Retirement Fund is reviewing request for proposals that we submitted for the new asset allocation.”
He said the money managers were informed to submit proposals for a certain category within the allocation.
“When we are talking of the allocation, we are talking about the assets — the $320 million that’s in the market. And we are talking about percentage allocation to equities and bonds and how much of those are kept. Because there is a change of percentage, some money managers will not have the opportunity [to work with us anymore].”
He said if the Fund decided on mixing up the allocations to get some new form of investment scheme, some money managers may not be qualified as they may not be doing what the Fund wants done next. “Some of them may not have the ability. Some are very general and some are very specialized to certain form of stock investments or certain form of bond investments,” he said.
He said the Fund will be retaining some money managers if they have an allocation that they decided to retain.
“If we have money managers that are performing well, those will be kept on board,” Igisomar said.
Previously, the Fund invested in large and small cap equities, fixed income, and other alternative investments. In Sept. 2009, for example, the Fund had $48 million with Atalanta Sosnoff; $45 million, Stralem & Co.; $47 million, Renaissance Investments; $22 million, Fisher Investments; $18.5 million, Nicholas Applegate; $52 million, Richmond Capital; $45 million, Franklin Templeton; $19 million, JP Morgan Opportunistic Fund.
Variety was not able to obtain any recent breakdown of the Fund’s investment allocations.
Asked what prompted the need to hire new money managers, Igisomar said: “Every now and then we need to review our asset allocations. Every now and then, we need to review our investment portfolio. That’s what we did. We reviewed the portfolio and verified the portfolio whether currently it is good or what it is in comparison with the current market changes. What should we do? Since we went through that analysis, we decided to see what the alternative options are.”
During the review of the proposals from money managers, Igisomar said they looked into “snapshots of time.” “We have to review the yields, five years, 10 years, or if they have been here 20 years. We can’t just make judgment on the managers not meeting the yield. Of course we want everybody to be positive. They have up and downs. They have to stay within their peers.”
In comparing the performance of the money managers, Igisomar said they compare their performances with the market. “If I gave you equity and I wanted you to invest stocks in Wall Street — and you are holding that money. Everybody else is making 6 percent and you are making 5 percent, maybe you are OK. If everybody is making 6 percent, and you are making 7 percent, I am happy with that. If everybody else is making 6 percent, and you are making zero, I am not happy. I need to understand.”
In these reviews, Igisomar said they need to review the reasons for the non-performance including a possible change in ownership and if it happened only just that period.
“There is a lot more involved when you start getting into the money managers’ review. I know we’ve released some managers when we came onboard last year. We reviewed them. We noticed they are not performing. It’s really the performance — the performance in terms of yield percentage in comparison with their peers and the overall market,” he added.
The trustees met last Friday in an executive session as they discussed the details of the changes to the asset allocation of the funds.
Igisomar said whatever information on the changes to the allocations will be withheld until the board arrives at a decision.
In the meantime, he said he was concerned with how to get those money managers and to transfer the funds accordingly.
