SC Pension Fund’s Top Investment Officer Resigns

The first rat to jump ship.

There is no excuse for high fees, but it is asinine to say 7 billion was “left on the table” because the pension funds were invested more conservatively. If the numbers were run in 2009 when the S&P was in the toilet, would SC not have been ahead of all those more aggressively positioned funds? This has the stink of political vendetta. Pensions SHOULD be invested conservatively. The numbers here reflect the Fed’s QEx policies inflating stock prices. When that bubble pops, perhaps we won’t look so bad.

I watched the commission meeting yesterday and reviewed the
information that was publicly released on the RSIC website. When reviewing
performance, there were some key facts that were disclosed that continuously
fail to make headlines. When looking at the returns in the context of the risk
taken to achieve them, the RSIC has actually done quite well. Over three years,
it is in the top 26% versus its peers and over 5 years, it’s in the top 35%. What this means is that the RSIC is taking a less risky approach to managing retirees money. They are getting better returns and taking less risk than 2/3 to 3/4 of the other investors out there. Despite where the returns are on a nominal basis, taking unnecessary chances to reach for bigger returns doesn’t sound like the smart thing to do. When a person looks at the COMPLETE picture it’s clear that taking a conservative approach and trying to reduce risk for the benefit of the retirees is the right way to go. (see page 29 of the full presentation – page 9 of the AON report).

The consultant did make a valid point that the reduced public
equity exposure versus the peers has been a detriment to overall performance.
But it should also be noted that the pendulum swings both ways. When equity
markets drop, this defensive position will help retirees and they won’t see the
fund fluctuate in value like their peers either. Hence, the lower risk(volatility)
position. Life is full of trade-offs, in order to prevent future losses an
investor has to sometime give up short term gains. I know – that’s not popular
in today’s society: Giving up something now to prevent something more
detrimental in the future. What a novel idea. But when you have thoughtful,
diligent, methodical investors trying to work in the best interest of its
beneficiaries, that’s the path that will be taken.

It’s disappointing that Curtis Loftis doesn’t consider the
risk taken when discussing returns. He could just as easily say something to
the effect that the RSIC is taking a diligent approach and getting good returns
considering the risk that it wants to take. But, alas, that’s not the case.
Many investors are taught that risk, not return, is the primary focus when
managing someone else’s money. Unfortunately that’s lost on the STO. And as this message board shows, on the broader public too.

Incidentally, the asset classes that are charging all those “excessive
fees” also happen to be the ones that have produced the highest returns for the
fund over both the short and long term. The returns shown are net of fees
(after they are paid) and they still out perform all the other asset classes.
It’s too bad that didn’t get mentioned either.

Keep up the good work RSIC. You have a lot of headwinds that
other plans don’t have and you continue to persevere!

Did Loftis release his long awaited portfolio plan to the investment board this week?