Rhode Island's new investment policy requiring transparency from investment managers might lead more public plans to insist on similar openness from money managers, including private equity firms.
The “Transparent Treasury” initiative put forth by Rhode Island Treasurer Seth Magaziner requires money managers wishing to do business with Rhode Island to publicly disclose information about performance, fees, expenses and liquidity. All fund managers must agree to the release of this information before overseeing state investments.
The treasurer's website also will feature a new data portal that offers access to state treasury information on investments of all state funds.
The Rhode Island State Investment Commission, Providence, which manages the $8.3 billion Rhode Island Employees' Retirement System, voted unanimously in favor of adopting the initiative last month.
“This is something I've wanted to do (since) before I was elected,” said Mr. Magaziner in a phone interview shortly after the initiative was adopted on May 27. “Transparency was something I campaigned on. There's been a national discussion on transparency within our pension plans.”
Although Rhode Island isn't the first pension plan to promote transparency, it appears to have one of the most comprehensive and wide-ranging transparency policies in the U.S. “We are not aware of any other states that require fund-by-fund disclosure not only of management and performance fees, but also investment-related fund expenses, such as accounting and legal expenses,” said Shana Autiello, spokeswoman for Mr. Magaziner's office.
“We also believe there are very few states that post online calendars of when they intend to put contracts out for bid years in advance, have online data portals with raw investment data going back three decades and have had transparency policies made permanent by their state investment committees,” she added.
Alan Kosan, senior vice president, head of alpha investment research at consultant Segal Rogerscasey, Darien, Conn., said he doubts Rhode Island is alone in requiring the public disclosure of this information from its managers and general partners, but admits “what they've done is very comprehensive and clearly in the forefront of this movement to dig deeper and provide more disclosures.”
“It will be interesting to see how the manager community reacts to this,” he added.
And the state might not be alone in launching transparency initiatives this year. Although they're currently just in the “kicking-the-tires” phase, investment officials with the $90 billion North Carolina Retirement Systems, Raleigh, will launch a structured third-party review of fees and incentive payments later this summer as a means of seeking more transparency and having “greater assurance about the fees that we are paying,” said Kevin SigRist, North Carolina's chief investment officer, at a May 20 investment advisory committee meeting.