We received this comment from a member:
I’m not always convinced MPERS is as frugal as it needs to be on the cost of investment advice. The fund needs to be professionally managed, but is there some room for improvement here?
Part of MPERS’ mission statement notes that one of our primary purposes is to provide “professional plan administration and prudent management of System assets.” To achieve that goal, the Board of Trustees relies on a highly educated and experienced internal investment staff and an external asset consultant.
MPERS’ internal investment staff includes four individuals. Education and experience are critical characteristics required of the staff we utilize in this area. The educational background for our staff includes:
- All members of our team hold bachelor degrees in finance or related fields,
- Two members hold Master’s degrees,
- Two members maintain Chartered Financial Analyst (CFA) designations, often the most respected and recognized investment management designation in the world, with another pursuing the same, and
- Three members maintain Chartered Alternative Investment Analyst (CAIA) designations, which is viewed as the highest standard of achievement in alternative investment education.
We have a very dedicated and professional investment staff which produces investment returns that are competitive with other institutional investors using far greater resources.
In addition to staff, MPERS’ Board maintains an independent asset consultant that works with internal staff to develop and implement the Board’s asset allocation strategies and investment policies. This consultant is obtained through a bidding process that considers: cost; firm personnel; and systems, resources, and processes. MPERS’ current general asset consultant is NEPC. NEPC’s consultants, like internal staff, are highly educated and experienced investment professionals
Another important component to the overall management of the MPERS portfolio comes through the relationships developed with our individual investment managers (i.e., the managers hired to actively manage our funds). MPERS maintains over 75 different relationships with individual managers, each typically having a team of sophisticated individuals overseeing our assets. The breadth of education and experience these individuals maintain is immense and indescribably useful to our internal team and our consultant with tactical decisions connected to the day-to-day management of our fund. And this professional investment management and advice comes with a price. As with many things, you get what you pay for. We expect the best results and that does not come cheap. We do, however, maintain a constant focus on the costs associated with this oversight and work to achieve the best, most cost-effective services available.