Don't worry, be happy
The U.S. stock market's recent pullback probably won't lead highly overfunded corporate pension plans to make a pension contribution.
Actuarial smoothing practices, and the fact that contributions are based on calendar-year returns, temper the effects of a stock market fall, said Michael J. Prokopow, actuary with Watson Wyatt.
"The current market decline is not significant, since it only reverses excess returns since the beginning of the year," said Mr. Prokopow.
The typical practice of smoothing returns over five years means only 20%of the current year's return will affect funding levels, he said.
Moreover, only the returns for the calendar year count. In 1987, investors were up for the year, even though there was a crash in prices in October, Mr. Prokopow said.
Swiss bill opposition urged
The $88 billion California State Teachers' Retirement System staff last week recommended opposition to California State Senate Bill 1879, which would prohibit additional or new investments in Swiss banks and investment firms.
The bill -- affecting state trust funds or state trust assets, including state pension fund money -- is aimed at pressuring the Swiss government to reach a settlement with Holocaust survivors.
CalSTRS' staff said the bill interferes with trustees' fiduciary responsibility, restricts the funds' investment universe and fails to provide indemnification for the fund or trustees.
Staff members said they have been unable to measure the extent to which the bill would hurt normal investment operations.
Trustees failed in two tries to take action on the staff's recommendation because several abstained from voting.
NY fund cuts firms
The $105 billion New York State Common Retirement Fund terminated two domestic large-cap money managers --Lord Abbett and Miller Anderson & Sherrerd. Jeffrey Gordon, spokesman, said both were terminated for "underperformance to the S&P 500." Calls to both firms weren't returned by press time.
Lord Abbett ran $383 million and Miller Anderson, $372 million.
The fund also terminated two global bond managers -- Morgan Grenfell, with $423 million, and Strategic Fixed Income, with $398 million. Mr. Gordon said the board decided against exposure to global bonds. The $821 million will be transferred to an internally managed fixed-income portfolio.
Of the large-cap money, $300 million went to a J.P Morgan Investment Management enhanced index fund, bringing the total to $643 million; and $100 million to a large-cap growth portfolio with Morgan Stanley Asset Management, bringing the total to $275 million. The remainder went to cash.
The fund also reduced its large-cap core portfolio with Salomon Smith Barney by $500 million. It had been $1.4 billion.
Emerging debt cap raised
The $10 billion San Francisco City & County Employees' Retirement System approved expanding the amount Brinson Partners, a global fixed-income manager for the fund, could invest in emerging market debt to 10%from 5%of assets under management for the plan. Brinson Partners' portfolio for the pension fund is about $389 million. Asset Strategy Consulting recommended the change.
Oak Ridge taps 2
John Peters and James Babson were named president and senior vice president, two new positions at Oak Ridge Investments, Chicago. Previously, Mr. Peters was president of Dreman Value Management and Mr. Babson was vice president and director of marketing at Insight Capital Management; both positions remain vacant.
Parmentier gets new titles
William Parmentier has been named president and CEO of Liberty Asset Management, which manages two closed-end mutual funds with total assets of $1.5 billion. He will continue as CIO.
Mr. Parmentier replaces Richard "Chris" Christensen, who will serve as chairman until he retires next year.
Michigan picks Johnson
Jacqueline Johnson was appointed administrator of the stock analysis division of the Michigan Department of Treasury, replacing Alan Van Noord, who now serves as director of the department's Bureau of Investments. Previously, Ms. Johnson was assistant administrator.
Ms. Johnson will oversee an $18 billion domestic and foreign equity portfolio with three in-house managers.
Fund picks BondEdge
The $75 billion New York State Teachers' Retirement System has licensed Capital Management Sciences' BondEdge for Windows, an analytical software product. About 15% or $11.5 billion of the fund's total assets are allocated to domestic fixed income and managed internally, said Matthew Fitzgerald, investment officer for fixed income.
He said the fund wants the software to help in the regular review of its allocation strategy, and for extensive analysis of its fixed-income portfolio.
RFI window open
The $850 million Wisconsin Deferred Compensation Program will accept RFIs regarding a mutual fund brokerage window option through Aug. 17, said Mary E. Willett, director-supplemental retirement plans.
So far, Wisconsin has gotten no responses, she said.
Evans joins TeamVest
David Evans joined TeamVest as a managing principal and director of advisory services, a newly created position. TeamVest offers investment advice and financial planning to 401(k) plan investors. Mr. Evans most recently was CEO of Scarborough Retirement Services, a 401(k) plan advisory firm. Michael Scarborough, president, will assume the role of CEO.
Electronic move backed
Chicago Mercantile Exchange Chairman M. Scott Gordon last week outlined his commitment to moving selected CME futures contracts to an electronic trading platform, possibly in partnership with other exchanges.
"Interviews and analyses have provided us with a clear message. Our customers are demanding an electronic alternative for some of our products," Mr. Gordon said in a letter sent to CME members.
Ellen Resnick, a spokesman for the exchange, declined to say which contracts are candidates for electronic trading