Previous Story
Fund sees drop in total managers’ fees
|
Posted on Jun 21 2011
From just nine money managers handling the NMI Retirement Fund’s investment portfolio, the agency now has a total of 11 companies that will manage the pension program’s various investments.
This came about after the Fund board approved the selection of seven new money managers and retained the services of four others.
Despite the increase in numbers, Fund counsel Carolyn Kern said they project to see a reduction in total money manager fees.
“The money managers are paid based on the value of the funds they invest and our overall amount available for investment is decreasing as we continue to drawdown to pay for benefits, and the movement to passively managed allocations will be less expensive, as well as more liquid,” she told Saipan Tribune yesterday.
As of April 30 this year, the Fund’s investment portfolio was valued at $328 million.
Board of trustees chair Sixto Igisomar said the hiring of more money managers is a requirement of the new asset allocation model recommended by the Fund’s investment consultant, Wilshire Consulting. That model uses a “moderate-alternative” strategy that requires a slightly “more risky” approach in a bid to obtain higher returns.
Igisomar disclosed that the money managers will be paid not in “soft-dollar payments” but on specific basis points approved for such strategies.
He said the average money managers’ fee is less than a percent of the amount they’re handling for the Fund.
Igisomar said the addition of new managers is the “best approach” right now but is not the solution to the current financial problem of the Fund.
“Is this the solution for the crisis? No, it is not…but this is the best solution and approach to managing the current portfolio,” he explained.
