$48M moved from CDARs to Fund’s custodian

A total of $48 million has been moved from the certificate of deposit account registry service to the Bank of Hawaii, the NMI Retirement Fund’s custodian, according to the pension agency’s administrator, Richard Villagomez.

During Thursday’s board meeting, Villagomez said that $59 million remain with CDARS but this will soon be transferred as they mature.

The Fund placed a total of $107.9 million in the CDARS program following the departure of the Fund’s investment consultant in October in the wake of the passage of the Beneficiaries Derivative Act, which has since been repealed. The Fund is not allowed to make any investment decision without the advice of an expert.

Investment consultant Wilshire Consulting Associates, which returned to the Fund after the Act’s repeal, advised the board on Feb. 25 to stop all transactions with CDARS and immediately transfer the money to its custodian.

Besides CDARS, the Fund also has assets invested in Vanguard short-term bonds, which was also ordered liquidated and moved to the custodian. This amounts to $68.6 million as of Feb. 17.

The Fund had $253.3 million in its portfolio as of last month.

“We have $59 million still to be transferred back to our custodian and we’re continuing the process as the [accounts] mature,” said Villagomez, adding that more cash will be moved to the custodian until everything is transferred.

He said the transferred cash accounts will be managed by Richmond and Blackrock, the money managers hired by the Fund to handle its portfolio. Another money manager, PIMCO, was also re-contracted by the agency for the same purpose.

Besides hiring three money managers, the Fund board also approved the modified Glidepath 2012 strategy, described as a more conservative allocation that poses a lower risk to the Fund’s assets.

Blackrock is the Fund’s passive investment manager and will handle a global equity index fund and an intermediate fixed income index fund while PIMCO was hired to manage the Fund’s active core plus fixed income. Richmond Capital, meantime, will handle the agency’s member contribution reserves.

Last Thursday, the board authorized its legal counsels to accept Blackrock’s annual financial report as the company’s disclosure requirement in meeting the Fund’s IPS (or Investment Policy Statement). The contract for Blackrock is expected to be processed soon.