TALLAHASSEE, Fla. -- International stock and bond managers will be vying for up to $700 million in new business now that Florida's police and fire pension funds may invest internationally.
After a three-year battle, the state's 400 police and fire pension funds won permission from the Florida Legislature to invest up to 10% of their total assets in international securities. The bill became law May 22; the funds will be allowed to invest overseas beginning Oct. 1.
Together, the funds have about $7 billion in assets.
Most of the funds are expected to make asset allocation changes to include international, although most boards have yet to discuss specifics.
Some might decide to invest only 10% of their equity allocations, rather than of their total assets, said Patricia Shoemaker, retirement administrator for the Municipal Police Officer and Firefighter Retirement Trust Fund Office, Tallahassee. That means at the very least $350 million could be invested in the new asset class.
When trustees for the $800 million Jacksonville Fire and Police Pension Fund meet June 18, John Keane, fund administrator, plans on recommending the maximum 10% of total assets be invested in international securities.
No timetable has been determined for funding the allocation. The split between stocks and bonds will be decided at that meeting. Merrill Lynch Consulting Services, Jersey City, N.J., will be preparing requests for proposals shortly thereafter, he said.
"With increased globalization taking place, our board thinks it's very important to participate in this arena," Mr. Keane said.
Mr. Keane acknowledges it might not be all bad that it has taken so long for the bill to become law. Florida's police and fire funds might be lucky to get into foreign markets after the Asian crisis, he reasons.
Other funds aren't as far along as Jacksonville's.
Trustees for the $300 million Fort Lauderdale Policemen's & Firemen's Retirement System plan to discuss the law at their June 10 meeting. St. Louis-based Asset Consulting Group will be assisting.
Melanie Blais, secretary of the $952 million Tampa Police & Firefighters' Pension Fund, said the subject probably will be discussed at the board's June 9 meeting. The Tampa fund uses Bowen Hanes & Co., Atlanta, as its sole manager. Jay Bowen, president of Bowen Hanes, said his company would be willing to manage an international portfolio if asked by the fund. Bowen Hanes has $1.3 billion under management, of which $30 million was in foreign equity.
Robert Nagle, retirement administrator for the $1 billion-plus City of Miami Firefighters & Police Officers' Retirement Trust, said it's too soon to say whether Miami will allocate the full 10%.
In Orlando, the $321 million police and fire fund is likely to invest abroad through mutual funds, said Jody Litchford, chief assistant city attorney. The police and fire fund probably would use the same approach as the $185 million general employees' plan, which has about $28 million invested internationally through mutual funds managed by Morgan Stanley Asset Management and Scottish Equitable Investment Management.
In Boca Raton, Bob Daniels, administrator of the $116 million police and fire fund, said trustees might seek a specialty international manager. A timetable for a search has yet to be determined. The board will meet again in June to discuss the new law.
"We're going to look at the foreign side with our investment committee and see what opportunities there might be for us," he said.
The board will not fund the entire 10% allocation right away; it will be considering both stocks and bonds.
"Obviously, anything we're going to be doing we will be doing cautiously and we're not going to rush into anything."
