Fund approves hiring of 3 money managers, return to to Glidepath

The NMI Retirement Fund’s board of trustees approved Friday the hiring of three money managers and adopted a modified strategy for its investments as recommended by consultant Wilshire Consulting Associates.

Wilshire’s Maggie Ralbovsky had recommended hiring Blackrock, PIMCO, and Richmond Capital to immediately execute the revised strategy that is more conservative but will pose a lower risk to the Fund’s portfolio.

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

According to Ralbovsky, the cost of hiring these three money managers is roughly $475,000, about 0.19 percent of the Fund’s current assets.

PIMCO and Richmond previously served the Fund while Blackrock was about to sign a contract last year when the then-Beneficiaries Derivative Act was enacted, scuttling the transaction.

Because of time constraints and at Wilshire’s advice, the Fund board also ordered the immediate transfer of maturing accounts under the CDARS program. It was revealed that some $30 million is scheduled to mature soon at CDARS, certificate of deposit account registry service. The board participated in this program when Wilshire terminated its contract with the Fund last year.

The board also ordered Friday the immediate liquidation of assets invested in Vanguard short-term bond. Based on Fund records, there is $68.627 million in this account. The funds will be transferred to the Fund’s custodian, Bank of Hawaii.

Also adopted was an amendment to the Fund’s investment policy statement, defining the role of money managers and investment consultants.

A year ago, Wilshire recommended a financial strategy called Glidepath 2012 transitional policy, as a means to shore up the Fund’s depleting assets. That strategy’s projected returns for the Fund was at 4.11 percent and risk at 5.42 percent. The asset allocation under this strategy includes global stock, 12.5 percent, and fixed income, 87.5 percent.

Under the revised plan, called Glidepath 2013, the expected return is 2.75 percent while risk is projected at 3.29 percent. This is based on an allocation that places 30 percent of the Fund’s assets on short-term bonds and 70 percent on core plus fixed assets.

Ralbovsky said that once a “sustainable” level is reached, Wilshire will go back to the board to recommend a new strategy for the investment portfolio.