The $600 million Washington Metro Area Transit Authority Salaried Retirement Plan is one of the few plans in the nation that can brag about not having fired a money manager in more than 20 years.
Oppenheimer and Alliance Capital have managed equities for the plan since March 1981. Oppenheimer also has managed a fixed-income portfolio since then, and Alliance has managed a fixed-income portfolio since 1993. Oppenheimer has returned an annualized 15.64% as an active, domestic large-cap value equities manager and 9.7% as a fixed-income manager; and Alliance has logged an annualized 13.49% return as a domestic large-cap growth equities manager 6.48% on its fixed-income portfolio.
From March 1981 to March 2000, the S&P 500/BARRA Growth index returned an annualized return of 13.5%; the S&P 500 BARRA Value index returned an annualized 14.3%; and the Lehman Brothers Government/Credit Bond index, 10.23%.
The plan assumes an actuarial rate of return of 9%. At the peak of the stock market a little more than two years ago, its surplus assets were 127% of accrued liabilities.
Ehsan Rehman, portfolio manager, said absolute returns are more important than relative returns. "You have to keep in mind what the fund's objectives are," Mr. Rehman said.
And it finally may be time to make some changes. The fund is planning to conduct its first asset allocation study in years, and it may search for new managers as a result, he said.