The column in the Nov. 25 issue, "Consultants' aim was off," by Barry B. Burr, was extremely damaging and inaccurate regarding Yanni Partners.
Let me elaborate. Yanni Partners had a single client, the Retirement Board of Allegheny County, with assets at Advanced Investment Management. On a regular monthly basis, we received and reviewed reports on the activity from Advanced Investment Management regarding our client. For the 17 months that Advanced Investment Management was managing an enhanced index fund for our client, there were no violations whatsoever of the client's investment guidelines, and the performance on a regular monthly basis was clearly within an acceptable level of the S&P 500's performance for every month. In fact, the monthly performance exceeded the target index. When Mr. Burr called me to discuss Advanced Investment Management, I was extremely candid with him. The fact was and remains to this day that had Advanced Investment Management not run into difficulty with its other clients regarding the well-publicized issues, we at Yanni Partners and our client, the Retirement Board of Allegheny County, were entirely satisfied that Advanced Investment Management was performing exactly in-line with directives and expectations.
Given all that, I think Mr. Burr was extremely unfair to our organization for his criticism that we should have been aware of activities that were occurring within the holdings of other organizations' portfolios that were not our clients. There is absolutely no way we could have access to the confidential and proprietary guidelines and objectives of Advanced Investment Management's other clients to determine whether or not Advanced Investment Management was performing within the guidelines of those clients.
James E. Yanni
Editor's note: The column didn't state Yanni Partners should have known of AIM's problems in advance.
`Trick play' ideas
Plan sponsors of both public and private pension plans that are "cracking open the trick-play book to come up with money to cover shortfalls," as phrased by Pensions & Investments ("Taking a toll," page 1, Dec. 9), should re-examine the often hidden treasures in their existing funds, namely, tax reclaims.
Many fund sponsors have generated tens and even hundreds of thousands of dollars in additional income through aggressive pursuit of reclaims on income they have already earned on their international assets.
Funds invested in non-U.S. securities may not be collecting all the income that their assets are already generating, or may not be receiving money they are entitled to on a timely basis. Here are some primary reasons:
* Investments in American depository receipts, or in U.S.-listed shares of foreign companies like Philips NV or Deutsche Telecom, are entitled to reclaim certain taxes withheld at source by foreign tax authorities. Many investors assume that because they are U.S. dollar-denominated or traded on U.S. exchanges, there is no reclaim possible.
* The managers of investment partnerships that invest in foreign shares may not be filing on partners' behalf because the process is complex and they feel the dollar amounts are too small. A plan sponsor may have a different perspective on what is "too small."
* Tax reclaims are difficult to manage and require well-trained, experienced staff to process on a consistently accurate and timely basis. Safekeeping account structures may also inhibit the proper tax classification of beneficial owners, resulting in under-reclamation of entitlements.
Both public and private plan sponsors that invest in international markets should conduct a proper analysis of reclaims received, if possible using an independent tax reclamation specialist firm, to ensure they have received all of their entitlements. Many may even find a real current windfall through the collection of missed or incorrect reclaims from prior years. Country rules differ, but up to six years of back reclaims may be filed in some circumstances.
Going forward, sponsors should assure themselves that current reclaims are being filed completely and on a timely basis. Public funds owe it to their taxpayers to make sure that the basics are being executed properly so they can reduce their reliance on trick plays.
William L. Imhof
The Alliance of Fiduciary
Consultants International Inc.
Suit against Schroders
Please refrain from such detailed articles as Ms. Haugh's suit against Schroders (P&I, Oct.14, page 3).
Certainly her exit is news, but the details of the allegations, and the known fact that the ex-employer certainly can't respond, aren't meant for your type of publication.
Cheryl A. Griest
AAA Mid-Atlantic Inc.
Pensions & Investments welcomes Letters to the Editor and submissions of commentaries for the Other Views page. Letters and other submissions may be sent by mail to Barry B. Burr, Pensions & Investments, 360 N. Michigan Ave., Chicago, IL 60601; by fax, to (312) 649-5228; or by e-mail to [email protected]