Pick a directory - any one will do - of money managers or consultants or pension funds; start making random phone calls in June, July and August; and a pattern emerges:
"Hi, you've reached (name). I'll be out of the office until (insert date here). If you need immediate assistance, please contact ..."
You get the picture. It's vacation time in pension fund land and money management world.
This is not news; after all, summer is the traditional time for family vacations. The kids are out of school, mom and dad need a break, and really, who wants to visit the Jersey shore in February?
What is news is that more people are sticking around and transacting some serious business in the summer months. Although activity in the stock and bond markets still slows dramatically and liquidity dries up during the dog days, summer is, for some, a time to get ahead.
"We are indeed very active this summer," said John Day, assistant executive director of the $22.8 billion Illinois Teachers' Retirement System, Springfield.
TRS trustees won't be ranging too far from home for too long in August - that's when the fund will hold a three-day meeting to deal with a host of changes related to an asset allocation study done in April. That study already has resulted in the termination of one manager, GE Asset Management, Stamford, Conn. Decisions on other changes may or may not be made at the August meeting, Mr. Day said.
The larger goal of the asset allocation study - and part of the motivation behind the manager turnover - is to increase the system's overall equity allocation to 41% of total assets from 31%.
Plenty of other pension funds also are shifting assets in an effort to rebalance their portfolios, said Ross McLellan, vice president of transition management for State Street Global Markets LLC, Boston, a division of State Street Global Advisors. As a result, transition managers like Mr. McLellan are gearing up for their busiest summer ever.
"Typically, July and August are the slowest months of the year for us, and obviously that's true for the markets also," Mr. McLellan said. "But what we've seen lately is that the market direction has thrown pension funds' asset allocations out of whack. Given the activity we're expecting, (this) July will be our busiest ever. This June is already the busiest we've ever had."
Few breaks in June
That June is busy isn't necessarily a surprise, Mr. McLellan added. It's a quarter-ending month - and for many pension plan sponsors, the end of the fiscal year - so in the days leading up to June 28, the last business day of the month, the markets are hopping and almost nobody goes on vacation. Additionally, the impending reconstitution of the Russell stock indexes generates buzz and business at the end of June.
But come July, many in the business hit the snooze button. On July 3, the markets close early. They're closed completely July Fourth. July 5 is, in Mr. McLellan's words, "a complete loss."
And in a nice bit of Catch-22, when business gets slow, liquidity vanishes. When liquidity vanishes, transaction costs rise. When transaction costs rise, tight-fisted pension funds tend to stay on the sidelines, which erodes liquidity.
"That's true of most years," he said. "The July Fourth week for the market is a slow period and there's limited liquidity. A lot of people try to get everything completed by June 30. After June 30, people start disappearing."
That includes Mr. McLellan, who is planning a weeklong vacation on the Jersey shore right after the Fourth of July weekend.
Twenty-five miles north of Boston, in Andover, Mass., Elena Kothman is looking forward to her own early July vacation. Hers will be spent close to home for no particular reason other than those are sometimes more relaxing than planning a trip to someplace else and dealing with travel hassles.
The $65 million Andover Contributory Retirement System, for which Ms. Kothman is the retirement administrator, will not be taking a similar vacation. The fund's board recently decided to change its equity asset mix from 60% growth and 40% value to 40% growth and 60% value, Ms. Kothman said. That's all gone "very well," she said, citing evidence from the fund's sole investment manager, Harbor Capital Management Co., Boston.
The system's four-member board meets every month, even in the summer, and always has a quorum, Ms. Kothman said.
As it turns out, Ms. Kothman was fielding questions about the pension fund in part because the system's ex-officio board member, Town Accountant Rodney P. Smith, was on vacation.
Away on business
At consultant Ennis Knupp & Associates Inc., Chicago, spokeswoman Harmony Smith said she would love to have someone call back to discuss what advice consultants offer their clients in the summer and talk about the firm's workload, but many of the top people were traveling - on business, she added.
But summer's slower pace is noticeable. "I'm sure there are a lot of vacations taking place," Ms. Smith said in general, not specifically about Ennis Knupp. "Everyone waits for their kids to get out of school and then they make a run for it."
A good portion of the staff at Austin, Texas-based consultant Robert Harrell Inc. will be running for Colorado in late June to celebrate the marriage of an employee, said Robert Lee Harrell, the firm's namesake, president, chairman and chief executive officer. In the meantime, the firm is busy going through actuarial numbers received in May and conducting asset-liability studies for several clients.
"Summer is a popular time for that," Mr. Harrell said. "We tend to have some slack time to work on these things. It's a good time to execute projects like this. Particularly in the endowment arena, there are no meetings. Those people are dispersed."
Joseph M. Fratto, executive director and trustee of the $650 million Chicago Park Employees' Annuity & Benefit Fund, said his board has no major decisions planned for its summer board meetings. But, he added, that is not a function of its being summer, it's just the way things worked out.
The fund is planning an investment policy review later this year, something it does every three or so years, Mr. Fratto said.
"Those always seem to happen around the fall or winter time, and maybe that's a function of the trustees and their vacation schedule," Mr. Fratto explained. "It's just easier to convene meetings."
However, the park employees' fund board meets every month, including the summer months, Mr. Fratto added.