PHOENIX The major portfolio overhaul under way at the $7 billion Arizona Public Safety Personnel Retirement System will not be derailed or further delayed by the departure of fledgling Chief Investment Officer Rob Brown, officials there say.
It doesnt affect the master manager plan, said James Hacking, administrator of the Phoenix-based system. The board has committed to it. We are going forward with this.
Mr. Brown was hired to create an entirely new investment portfolio strategy for the ailing system, where long-term returns were subpar and some particularly bad bets on technology stocks left the system at 69% funded as of June 30, 2007.
Mr. Browns strategy was unveiled in April, when the board gave preliminary approval to implement an index-plus master manager program for up to 90% of assets, and an absolute-return portion for the remainder, with plans for the latter to eventually subsume much of the master manager program.
The board selected Benchmark Plus Management LLC, Tacoma, Wash., and multiasset-class firms Morgan Stanley Investment Management, BNP Paribas Asset Management Inc. and Goldman Sachs Group, all of New York, as master managers later that month.
Getting legislation to allow commingling investments of the systems three plans and creating and unitizing a new trust have slowed progress on the revamp. But Mr. Browns departure will not cause further delays, partly because the revamp was developed by the entire investment staff, Mr. Hacking said.
That staff is still in place, he said.
Mr. Hacking expects to recommend that the board promote Ryan Parham, strategic analyst, to CIO, to avoid further delays, but acknowledged the board might wish to search for Mr. Browns replacement. Mr. Parham was interim CIO between the time James Nielsen retired in October and Mr. Brown was hired in January.
Mr. Brown, who will step down Nov. 8 but continue as a consultant through the end of the year, said his departure was a pure personal decision on my part. His son, a junior in high school, did not want to move to Phoenix, he said.
If Id been smarter, I would have brought them here (to Phoenix) before the last week in July, he said.
Mr. Brown said he has been offered a job in Southern California, where his family lives, but would not disclose the name or type of organization.
He praised the staff and mission at the Arizona public safety fund: The work here is extremely important, its extremely valuable. You cant ask for more genuine and worthwhile work.
Meanwhile, the systems board has another major decision ahead: hiring a new investment consultant. Ennis Knupp + Associates, Chicago, resigned in June. Principal Richard Ennis would not comment on the departure, but the firm had recommended against implementing aspects of the revamp and had urged caution generally to the board.
At a special meeting on Sept. 11, a subcommittee recommended the board hire Pension Consulting Alliance Inc., Portland, Ore., or NEPC LLC, Cambridge, Mass. Wilshire Associates serves as interim consultant, and was a finalist in the search, as was Strategic Investment Solutions Inc., San Francisco.
Contact Drew Carter at [email protected]