Thursday, August 25, 2016
Investment Committee approves the selection of Pension Consulting Alliance as
Strategic Portfolio & Risk Advisor
At its regular meeting on Wednesday, August 24, 2016, the Investment Committee approved the selection of Pension Consulting Alliance to provide strategic portfolio & risk advisor services. Culminating its RFP-driven selection process for a "strategic portfolio and risk advisor" - secondary consultant to complement the general consultant, Meketa - the OCERS Investment Committee selected the Pension Consulting Alliance (PCA) team of Allan Emkin and John Linder
Their engagement will begin immediately and they will participate along with Meketa in OCERS' upcoming Strategic Offsite Planning meeting in mid-September to work with the Board and staff on asset allocation and revisions to OCERS' portfolio structure, the development and documentation of formalized investment beliefs, and discussions of both cyclical and strategic risk management strategies. Both Meketa and PCA have advocated consideration of a flexible Opportunistic investment allocation, and will revisit with staff and trustees OCERS' allocations between bonds held primarily for duration as a recession-risk offset and unconstrained bond strategies. In the strategic process, staff expects that the two consultants will also study OCERS' use of hedge funds with an eye toward lower-cost alternatives and a reduced role in the portfolio. Marketers are referred to the OCERS investment Web page where the CIO routinely posts guidance to marketers and the proper portals for sales inquiries. As general consultant, Meketa will coordinate most manager searches; PCA has not been engaged for manager searches in this strategic advisory procurement and should not be contacted by marketers seeking OCERS' business.
"We are all very excited to begin working with PCA through this innovative engagement structure, which combines macro-level risk advisory services with valuable 'second opinion' and 'fresh ideas from outside the box'," said OCERS' CIO Girard Miller.
Other finalists were BlackRock Solutions and Verus Advisory, Inc. PCA has previously worked in a collaborative consulting engagement alongside Meketa at CalSTRS, and has provided "second opinion" services to other pension plans, according to Mr. Miller. OCERS will conclude its previous risk management services engagement with BlackRock Solutions once the transition is completed.
Monthly Investment Portfolio Report update
The Investment Committee received an update about OCERS' preliminary fund performance as of July 31, 2016. CIO Girard Miller reported that OCERS' total fund recorded a 2.44 percent increase in the month of July. OCERS has a year-to-date positive return of 5.35 percent. OCERS reported a one-year return of 2.04 percent as of that date, and a trailing five-year return of 5.74 percent. For the trailing 7-year span, OCERS' recorded a stronger 7.68 percent return.
Mr. Miller noted that strong returns in OCERS' equities investments helped drive strong returns in the month of July, with total domestic equity recording a return of 4.06 percent in the month of July. Total Emerging Markets Equity, International Equity and Total Real Return investments also performed well during the month.
As of July 31, 2016, OCERS' total fund was more than $12.9 billion.
State Street Bank to continue to serve as OCERS
At the regular Board of Retirement meeting held on August 15, 2016, State Street Bank was selected to continue to provide Custodian Bank Services to OCERS (pending successful contract negotiations). State Street Bank has provided custodian bank services since October 1998.
OCERS' Board of Retirement will hold its annual Strategic Planning & Education Forum at 8 a.m. on both September 14, 2016, on September 15, 2016. The Board will meet at Radisson Hotel, 4545 MacArthur Blvd., Newport Beach, CA 92660. The meetings on both days are open to the public.