Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. Print
February 23, 2004 12:00 AM

Letters to the Editor

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Comptroller's idea protects fund

    Unfortunately, a couple of points in your Feb. 9 editorial "Unfunded politics" are based on a lack of information.

    You state that the New York State pension fund would lose money if payments from some local governments are deferred for six weeks, as proposed by New York State Comptroller Alan G. Hevesi. In fact, the pension fund will collect interest at 8% for those six weeks. This information was not included in the press reports, so it is understandable that you missed it.

    You state that the fund will also lose money from a proposal to defer contributions until 2005. This relates to a small technical correction in last year's pension legislation that allows the state and local governments to borrow from the fund a portion of their contribution in 2004. If they choose to borrow from the fund, they also pay 8% per year to the fund.

    Comptroller Hevesi is a fiduciary with the responsibility to protect and strengthen the State Common Retirement Fund. He takes that responsibility very seriously and will never agree to proposals that would weaken the fund. He has agreed to proposals that either strengthen the fund or have no impact and also help local governments adjust to the fact that pension costs, which were unusually low in the 1990s, are returning to more normal rates.

    Pension contributions to the NYS fund in the 1970s and 1980s averaged 17% of payroll for regular employees, much higher for police and fire. They were much lower in the 1990s, thanks to the stock market boom. We are now telling employers to expect to contribute about 12% a year, which is still relatively low by historical standards.

    David Neustadt

    communications director, New York State Comptroller's Office

    Albany

    Excess cash impairs performance

    Thank you for your fine article in the Jan. 26 Pensions & Investments (page 2) on the fund performance research project I have been involved in using the Cost Effectiveness Measurement Inc. database.

    The article is factually correct, with one exception. It states, as summed up in a headline, that "actively managing asset allocation pays off."

    In fact, the study results suggest the opposite, with asset mix shift-related actions costing funds an average 21 basis points per annum over the 10-year period (1993-2002). When digging deeper into the causes of this finding, the main culprit seems to have been carrying excess cash during an extended period of generally strong stock and bond returns.

    Keith Ambachtsheer

    president, K.P.A. Advisors Services Ltd.

    Toronto

    Sortino misreads groceries and quotes

    Frank Sortino's Feb. 9 Other Views commentary cites a pension fund whose CFO sold all the stocks and invested solely in bonds. Mr. Sortino then goes on to make the most extraordinary comment about my work: "Peter Bernstein supports his idea, saying pension sponsors should ‘figure out a mix with the highest probability of being able to pay for the groceries.' "

    The word "mix," according to my dictionary, means "to combine or blend," which implies that more than one object is involved. You cannot have a "mix" with just one component. So the quotation he employs clearly fails to support the notion of 100% of anything.

    More to the point, Mr. Sortino is disingenuous in accusing me of supporting the idea that investors should hold one asset class instead of diversifying. He inaccurately reproduces my words. The quotation to which Mr. Sortino refers appeared in the Aug. 15, 2003, issue of the publication Economics & Portfolio Strategy: "The investor's problem is to fund a stream of liabilities. In that context, a policy portfolio is essential. But the ‘policy' is not to accommodate expected market behavior. Rather, the policy is to provide the investor with the highest probability of being able to pay for the groceries when the time comes."

    How can anyone reading those words interpret them as mandating 100% in any one asset? Indeed, anyone who has ever read any of my life's work knows full well that it is infused with a passion for diversification, as an explicit expression of our inescapable ignorance of what the future holds. As Mr. Sortino invokes Harry Markowitz and Bill Sharpe in his argument, I suggest he consult them about my views on diversification.

    Peter L. Bernstein

    president, Peter L. Bernstein Inc.

    New York

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    Private Markets
    Sponsored Content: Private Markets

    Reader Poll

    August 10, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Gaining Momentum: Where Next for Trend-Following?
    How Has 2022's Carnage Reshaped Global Stock and Bond Markets?
    Can Sustainable Labeling of Financial Products Prevent Greenwashing?
    Hedge Funds 2.0: Back to the future
    Is there a mid-cap gap in your DC plan?
    Why pursue direct lending in the core middle market?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    August 1, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit