Pension fund executives are examining their investments with J.P. Morgan Asset Management but taking a wait-and-see approach following news from parent company J.P. Morgan Chase of a $2 billion trading loss at the bank.
William Atwood, executive director of the $11.9 billion Illinois State Board of Investment, Chicago, said he does not think the news will have any kind of “material effect” on a $112 million real estate portfolio managed by J.P. Morgan Asset Management. However, he's more concerned with the stability of the global banking industry as he said it appears banks have not learned anything from the financial crisis or new regulations imposed on the industry.
“We would rather invest in independent money manager platforms than a global banking institution,” Mr. Atwood said in a telephone interview, adding the retirement system has a “pretty big bias” against large banks.
The $850 million AFSCME Pension Plan, Washington, used the news of the trading mishap for a renewed call for J.P. Morgan Chase to adopt its shareholder proposal for an independent board chairman at the bank's annual meeting May 15.
“J.P. Morgan Chase shareholders need to act together and tell the board that we want meaningful controls over risk and real oversight of management,” said Gerald W. McEntee, AFSCME president and trustee for the pension plan, in a news release. “… The stakes are too high to leave (J.P. Morgan Chase Chairman and CEO) Jamie Dimon unsupervised.”
Other pension funds are also monitoring the situation, but are hesitant to make any changes for now. Rod June, chief investment officer of the $10.7 billion Hawaii Employees' Retirement System, Honolulu, said the pension fund is looking into the situation, but there is no change at this time. He said staff will discuss the matter with the pension plan's consultant Pension Consulting Alliance.
“I think it's premature to say anything,” Mr. June said in a telephone interview. J.P. Morgan manages $625 million in international equities for the retirement system.
David Ewer, executive director of the $7.9 billion Montana Board of Investments, Helena, said it's too early to comment and that staff will go over all the data to make investment decisions. J.P. Morgan manages $323.7 million in domestic equity and $101.2 million in real estate for the board.
The $13 billion Kansas Public Employees Retirement System, Topeka, is also monitoring the situation at J.P. Morgan, said spokeswoman Kristen Basso, but officials there “do not expect it to have an impact on the international equity portfolio,” in an e-mail.
J.P. Morgan manages $479 million in international equities for KPERS.
Chaz Bickers, spokesman for Boeing Co., Chicago, said pension officials were not available for comment. J.P. Morgan manages a domestic fixed-income portfolio for the $49.3 billion defined benefit plan and $30.9 billion defined contribution plan.