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Rate of Return Good on GERS Investments

Aug. 29, 2007 — Government Employees’ Retirement System investments are bringing in a healthy 13-percent overall rate of return over the 12 months ending on June 30 of this year, investment managers told the GERS board of trustees Wednesday.
The board began three days of presentations by the managers of its investment funds Wednesday, with each company giving a brief PowerPoint presentation about its approach, what sorts of investments it has made, how those investments are doing and where they plan to go next. Some of the funds are doing better than others, but overall the rate of return is quite good. This helps to partially offset structural problems within the system causing it to pay out more money than it takes in.
Over the last decade the retirement system’s investments nearly doubled in value, according to a summary compiled by the GERS and presented to the trustees Wednesday. Ten years ago the holdings were worth $900 million. They have earned $851 million over the past 10 years.
Over the same time, however, the Legislature increased retirement benefits and offered early-retirement packages to some government employees. As a result, payments to retirees have outpaced payments into the system from employees by $467 million, leaving a net increase in total assets of $384 million. The total value of all investments, as of June 30 of this year, is $1.3 billion. But over time, as more employees retire, all of that and more will get eaten up, leaving a long-term shortfall of more than $1 billion if nothing is done.
Gov. John deJongh Jr. has unveiled a partial plan to address the shortfall, but to date it remains a work in progress. (See “Governor Unveils Plan to Pay Off $1 Billion GERS Liability.”)
The GERS investments are spread over an array of investment funds for a highly diversified portfolio. Some specialize in domestic funds, others in international ones. Some only invest in very large concerns and funds, and others only in “micro-cap” funds. Some avoid risk and others take a higher level of risk in hopes of making a higher rate of return.
On Wednesday, the trustees heard from Segal Advisors; AmeriCap Advisers; Trusco Capital Management; Turner Investment Partners; Bjurman, Barry and Associates; Oberweis Asset Management; Fisher Investments; and State Street. Thursday and Friday they will hear from AllianceBernstein; Atticus Fund, Brandywine Global Investment Management; LSV Asset Management; MDL Capital Management; NWQ Investment Management; Oechsle International Advisors; PIMCO (Pacific Investment Management and Union Heritage Capital Management). Representatives from the West Indian Company will also be present to report on the operations of the Havensight Mall.
Here is a broad breakdown of GERS investments, in millions of dollars:
Large Cap Equity
State Street: $3.2
Union Heritage Capital: $37.2
LSV: $130.6
NWQ: $117
Trusco: $137.9
Turner: $91
AmeriCap: $29.6
Total: $546.9
Small Cap Equity
Fisher: $50.6
Bjurman, Barry: $40.2
Oberweis: $47.4
Total: $138.2
International Equity
Oechsle: $74.7
Brandywine: $84.2
Total: $158.9
Domestic Fixed Income
Alliance: $146.7
MDL: $54.1
PIMCO: $116.5
Total: $317.2
Global Fixed Income
Brandywine: $122
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Aug. 29, 2007 -- Government Employees’ Retirement System investments are bringing in a healthy 13-percent overall rate of return over the 12 months ending on June 30 of this year, investment managers told the GERS board of trustees Wednesday.
The board began three days of presentations by the managers of its investment funds Wednesday, with each company giving a brief PowerPoint presentation about its approach, what sorts of investments it has made, how those investments are doing and where they plan to go next. Some of the funds are doing better than others, but overall the rate of return is quite good. This helps to partially offset structural problems within the system causing it to pay out more money than it takes in.
Over the last decade the retirement system’s investments nearly doubled in value, according to a summary compiled by the GERS and presented to the trustees Wednesday. Ten years ago the holdings were worth $900 million. They have earned $851 million over the past 10 years.
Over the same time, however, the Legislature increased retirement benefits and offered early-retirement packages to some government employees. As a result, payments to retirees have outpaced payments into the system from employees by $467 million, leaving a net increase in total assets of $384 million. The total value of all investments, as of June 30 of this year, is $1.3 billion. But over time, as more employees retire, all of that and more will get eaten up, leaving a long-term shortfall of more than $1 billion if nothing is done.
Gov. John deJongh Jr. has unveiled a partial plan to address the shortfall, but to date it remains a work in progress. (See “Governor Unveils Plan to Pay Off $1 Billion GERS Liability.”)
The GERS investments are spread over an array of investment funds for a highly diversified portfolio. Some specialize in domestic funds, others in international ones. Some only invest in very large concerns and funds, and others only in “micro-cap” funds. Some avoid risk and others take a higher level of risk in hopes of making a higher rate of return.
On Wednesday, the trustees heard from Segal Advisors; AmeriCap Advisers; Trusco Capital Management; Turner Investment Partners; Bjurman, Barry and Associates; Oberweis Asset Management; Fisher Investments; and State Street. Thursday and Friday they will hear from AllianceBernstein; Atticus Fund, Brandywine Global Investment Management; LSV Asset Management; MDL Capital Management; NWQ Investment Management; Oechsle International Advisors; PIMCO (Pacific Investment Management and Union Heritage Capital Management). Representatives from the West Indian Company will also be present to report on the operations of the Havensight Mall.
Here is a broad breakdown of GERS investments, in millions of dollars:
Large Cap Equity
State Street: $3.2
Union Heritage Capital: $37.2
LSV: $130.6
NWQ: $117
Trusco: $137.9
Turner: $91
AmeriCap: $29.6
Total: $546.9
Small Cap Equity
Fisher: $50.6
Bjurman, Barry: $40.2
Oberweis: $47.4
Total: $138.2
International Equity
Oechsle: $74.7
Brandywine: $84.2
Total: $158.9
Domestic Fixed Income
Alliance: $146.7
MDL: $54.1
PIMCO: $116.5
Total: $317.2
Global Fixed Income
Brandywine: $122
Back Talk Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.