ASSET OWNERS

MassPRIM to implement first phase of money-saving program

Massachusetts Pension Reserves Investment Management Board is entering the first phase of a program designed to reduce expenses and increase returns, confirmed Michael Trotsky, PRIM's executive director and chief investment officer.

The plans for Project SAVE were presented at the $53.9 billion Boston-based pension fund's board meeting on Friday.

Phase 1 initiatives, to be implemented this year and early next year, include developing ways to monitor MassPRIM's portfolio for potential actionable litigation as well as manage its claims-filing procedures to ensure the best participation in and recovery from domestic class-action litigation proceeds.

The initiative could result in increasing amounts recovered to approximately $700,000 annually.

Other Project SAVE efforts are:

  • Reducing of its hedge funds-of-funds investments in favor of direct hedge fund investments. The process is expected to be completed by the end of 2014 and should save $29 million for 2013 and $40 million total.
  • A new cash overlay run by The Clifton Group will put the pension fund's $1 billion average cash holdings to work by replicating the Pension Reserves Investment Trust fund's public markets passive portfolio. PRIM believes this could provide a return enhancement of up to $20 million.
  • A few public equities and hedge fund managers' contracts are also being renegotiated to reduce their contractual fees. Set to be implemented in January, this could save between $1.5 million and $7 million for each $100 million in equity strategies and hedge funds, respectively.
  • Investing a portion of its private equity portfolio without paying a management fee or performance fee through co-investment opportunities with its existing general partner relationships. PRIM anticipates up to $25 million in savings for each $100 million invested through this initiative.
  • Researching hedge fund replication. This exploration into engaging more passive hedge fund strategies could save the fund $7 million for each $100 million invested.

Early Phase 2 ideas for Project SAVE include moving money to passive strategies from active, moving funds to internal management from external and getting into direct real estate property investments. These initiatives are still being researched and considered.

Separately, the board approved the investment committee's recommendation to commit $100 million to the CCP Core Macro Fund, a hedge fund managed by Cantab Capital Partners.