Massachusetts Pension Reserves Investment Management Board, Boston, today hired Cliffwater as its general consultant, with a three-year contract. MassPRIM officials cited the strong ties the $36.1 billion pension fund forged with Cliffwater CEO Stephen L. Nesbitt and Managing Director Dennis R. Sugino, who advised MassPRIM while they were at the plan's previous consultant, Wilshire Associates. The two left to launch Cliffwater in early 2004. Michael Travaglini, PRIM executive director, said the decision should be seen as a vote for Cliffwater rather than as a vote against Wilshire, which "has done a good job for us." "While we are disappointed with the decision, we understand their desire to work with individuals with whom they have worked in the past. We will continue to provide all of our clients with the high level of quality service and counsel for which Wilshire is known," Julia Bonafede, Wilshire managing director, said in an e-mail.
Mr. Nesbitt said MassPRIM is a prime example of Cliffwater's focus on sophisticated pension funds that have substantial commitments to alternatives. Mr. Sugino told the MassPRIM board that Cliffwater plans to hire another client service professional and two alternative investment professionals, and it could add more, possibly ending the year with 12 or more employees.
Also, the board hired New England Pension Consultants as absolute-return consultant. The firm advised PRIM in its initial 5% hedge fund-of-funds allocation in 2004. The board approved three one-year contracts instead of a standard three-year contract, allowing PRIM to maintain maximum flexibility, reflecting the fast-changing nature of the absolute-return sector and MassPRIM's interest in eventually investing directly in individual hedge funds.
Separately, Stanley Mavromates was named MassPRIM's CIO, replacing Jerrold Mitchell, who retired on Oct. 4. Mr. Mavromates was deputy CIO; he will not be replaced. Both Mr. Travaglini and state Treasurer Timothy P. Cahill praised Mr. Mavromates' role in improving diversification over recent years.
Officials at MassPRIM also want all of its money managers to say whether they support efforts to convert public defined benefit plans into defined contribution plans, Mr. Travaglini said at the meeting. The responses will be reported to the board.
