Fund OKs liquidation of assets

The NMI Retirement Fund’s board of trustees approved yesterday the immediate liquidation of its assets, temporarily investing them in mutual funds, and eventually securing them in insured banks to protect them from market fluctuations.

The decision comes on the heels of the recent loss of the Fund’s investment consultant, Wilshire Associates, which ended its relationship with the Fund on Tuesday, according to officials.

As of Oct. 11, the Fund’s total portfolio had a market value of $264.29 million, according to Fund board chair Sixto Igisomar.

Pursuant to law, the Fund cannot invest its assets without the advice of an expert such as Wilshire Associates. An emergency request for proposal for Wilshire’s replacement was ordered yesterday.

The Fund’s money managers have been fleeing the Fund in droves since the passage of the Beneficiaries Derivative Act early last month. The new law allows pensioners to sue the Fund’s assets managers if the board of trustees refuses to initiation such action.

The Fund assets that are up for immediate liquidation are the foreign equities being handled by Templeton and the capital account being handled by Richmond Capital. The liquidation will also result in the termination of these money managers’ contracts with the Fund.

Templeton and Richmond Capital are the last remaining money managers of the Fund. The others-about four-had already terminated their contracts and had already liquidated the assets they were handling for the Fund. Those liquidations were completed Tuesday this week, according to Fund administrator Richard Villagomez.

As soon as the Templeton and Richmond accounts are liquidated, these funds will be temporarily placed in mutual funds. The intention, he told Saipan Tribune, is to “secure” the Fund’s assets while it looks for a financial adviser that will direct the Fund on where to invest.

With Wilshire’s departure, the board decided yesterday to adopt a “transitional” strategy where all funds-which have been moved to mutual funds-will be deposited in banks while the agency looks for a new financial adviser. They call this the Glidepath 2013 strategy.

The board also authorized the Fund to enter the CEDAR program, which will look for insured banks where the Fund can deposit its $264.3 million. The program is a way to provide FDIC insurance to depositors who carry balances beyond what is normally insurable.

According to Villagomez, transferring assets from mutual funds to banks may take some weeks because there is a $200,000 cap in the amount that can be deposited per account. This means that the CEDAR program has to find several banks to accommodate the entire $264.3 million.

The board approved depositing the Fund’s assets on a short-term period, not to exceed a maturity period of three months.

Wilshire, which provided the trustees a step-by-step procedure on how it can best survive, recommended the use of First Financial Corp. as a first choice for the CEDAR program, along with two other firms as alternates.

The board pointed out yesterday that once a new investment consultant is hired, the Fund will stop implementing the Glidepath 2013 strategy and will implement the new consultant’s recommendations.