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Wednesday, February 8, 2023
HomeNewsArchivesGERS Investment Partners Bear Watching, Consultant Says

GERS Investment Partners Bear Watching, Consultant Says

Aug. 31, 2007 — Government Employees’ Retirement System investments are bringing in solid returns and above-market benchmarks overall, but the GERS board of trustees should watch some of the system’s investment partners closely to ensure they remain solid, a consultant said Friday.
The suggestion from Gino Reina of Segal Advisors came after three days of briefings from GERS’ investment firms in the retirement system’s St. Croix offices. Segal Advisors is the firm hired to give independent investment advice to the GERS board.
During the three-day overview, small teams from each of 17 separate investment companies distributed printed reports and gave short PowerPoint presentations on the state of their GERS investments. Some of the funds are doing better than others, but overall the rate of return is quite good. This helps partially to offset structural problems within the system that cause it to pay out more money than it takes in.
These companies made presentations:
AmeriCap Advisers
Atticus Fund
Bjurman, Barry & Associates
Brandywine Global Investment Management
Fisher Investments
LSV Asset Management
MDL Capital Management
NWQ Investment Management
Oberweis Asset Management
Oechsle International Advisors
PIMCO (Pacific Investment Management Co.)
Trusco Capital Management
Turner Investment Partners
Union Heritage Capital Management
State Street Global Advisors
Magna Securities
Representatives from the West Indian Company also reported on the operations of the Havensight Mall.
The GERS investments are highly diversified. Some of these companies 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.
Reina cited volatility in the national real estate market and recent jitters in the stock market as cause for vigilance but not alarm. He singled out AmeriCap Advisors as a company to keep an eye on. AmeriCap recently stopped doing business with its largest and primary client, Missouri.
“I’m glad they were in communication with the (GERS) board about no longer having a relationship with the state of Missouri,” Reina said. “They remain a profitable organization, with $780 million under their management. Although it is unfortunate, I recommend for now you continue to monitor any developments. But right now I don’t think any action is warranted.”
Ten years ago the GERS investments were worth $900 million and since then have earned another $850 million, according to a summary compiled by GERS and presented to the trustees Wednesday. But in that same time, the Legislature increased retirement benefits and offered early-retirement packages to some government employees without increasing payroll deductions going into the system. 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. (For more details on GERS investments, see “GERS Board Surveys Investment Portfolio During Three-Day Forum.”)
But over time, as more employees retire, all of that and more will be eaten up, leaving a long-term shortfall of more than $1 billion if nothing gets done. Gov. John deJongh Jr. has revealed the framework of a plan to address much of the shortfall. (See “Governor Unveils Plan to Pay Off $1 Billion GERS Liability.”)
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