Fund investments at $366M

The NMI Retirement Fund’s market investments rose by $21 million or about 6 percent in October 2004 compared with the previous month of September.

Records provided by Merrill Lynch showed that the Fund’s investments as of Oct. 31 totaled $366.3 million, a marked improvement over September’s $345 million.

Fund administrator Karl T. Reyes said the good showing may be attributed to recent changes in the composition of money managers and equity sharing strategies.

In October, he said, the Fund began to put money under Treasury Inflation-Protected Securities or TIPs.

TIPS are a special type of bonds considered to be the safest type of investment in the world—safer than any stock, bond, or commodity. TIPS are sold by the U.S. Treasury as part of its ongoing effort to help finance the U.S. budget deficit. Unlike other bonds, the principal amount of TIPS bond increases over time with the U.S. rate of inflation.

The Fund placed $20.5 million on TIPS, representing 6 percent of its total investments. The agency intends to increase its TIPS investment to 10 percent.

“TIPS is the new investment for us. It makes money even if prime rate goes up or down,” said Reyes.

As of Oct. 31, the Fund’s large cap equities amounted to $179.8 million or about 49 percent of total investment; small capital equities totaled $46.6 million; international equities, $48 million; fixed income, $55 million; TIPS, $20.5 million; and cash, $16.2 million.

Reyes said the cash asset remains with the Bank of Hawaii, which would soon be assigned to a new money manager.

The Fund, in consultation with Merrill Lynch, terminated its contracts early this year with at least three money managers due to unsatisfactory performance. Reyes said managers are required “to beat at least 2 percent” of the market. Those terminated included Invesco Asia, Credit Suisse, and Bjurman.

The Fund currently maintains the following money managers: Atalanta Sosnoff Capital Corp., Atalanta Sosnoff Sabre, S&P 500 Index Fund (iShares), Stratem and Co., Renaissance Investment Mgt., Nicholas Applegate, Gabelli Asset Mgt., EAFEETF (formerly CSAM), Templeton Investments, Provident Investment Counsel, and Income Research and Management.

IRM, the newest manager hired, handles TIPS investments.

Fund’s investments plunged to as low as $189 million in October 2002 as its international equities went haywire due in part to the impact brought by the 9/11 crisis. The market performance began to improve about middle of last year.