WASHINGTON - The success of Assistant Secretary of Labor Olena Berg's latest project, setting up a clearinghouse for economically targeted investments, hinges on whether pension funds are willing to feed the information line with investment history.
"The major need in this area is information," Ms. Berg said. "The information will be harder to get than we've been hoping."
The clearinghouse will contain a database to track investment performance in terms of investment return, volatility, jobs created and social benefits. Training programs, a reference library, model investment packages and other services also will be available.
The Department of Labor hopes to distinguish ETIs from social investing, and to allay fears stemming from the lack of organized information. The clearinghouse will provide a classification system and an index of existing and proposed investment types.
In about three years, the clearing house should be operating without the Labor Department's financial or technical assistance.
But the initial obstacle in creating what might be the first comprehensive database on ETIs is getting the information from pension funds.
The Hamilton Securities Group Inc., Washington, has been contracted by the Labor Department for the $1.2 million, two-year deal. Hamilton will start by sending a survey to about 1,400 pension funds this spring. The survey will ask administrators whether they invest in a number of alternative investments, including small businesses and mortgage-backed securities.
Information from the survey will be crucial in getting to the next step: filtering out funds that may or may not invest in ETIs.
Hamilton then will focus on funds with ETIs. The detailed information eventually will become the cornerstone of the database.
It could be two years before the information is accessible to the public, said C. Austin Fitts, Hamilton's executive director.
"It takes time before you build a critical mass of data," Ms. Fitts said. "We need to structure forces that will continue to make us look harder and harder at the performance of our savings."
Once the information is ready to go, it will be available through the Internet or the Labor Department.
Plan sponsors have many hoops to jump through when considering any investment, Ms. Fitts said. The clearinghouse could be a resource pension funds use in determining whether a specific investment is worth pursuing, she said.
"When there is a potential for something to be done, the only way to figure out whether it's worth it is to get the data, or to spend a ton of money and to figure it out yourself," Ms. Fitts said. And figuring it out yourself "can be very risky.
"This data will not only disclose facts, but it will start to tell a story on things we really never thought of."
The clearinghouse is necessary to stamp out the "misinformation" on ETIs, Ms. Berg said.
"There is an automatic assumption .*.*. that because an investment does good, it cannot also do well," Ms. Berg said.
But some doubt the clearinghouse will change most corporate plan sponsors' opinions on the investment. Martin Tolep, assistant treasurer for the $525 million Woolworth Corp. pension fund in New York, said ETIs have not showed enough promise.
"This would be a waste of time. I'm not a fan of government and I don't want to invest in ETIs," Mr. Tolep said.
"Aren't there enough private capital deals out there where there are glowing prospects for profits?"
