Updated with clarification.
A hotly contested election for a seat on the San Francisco City & County Employees' Retirement System board is drawing attention to the role of pension trustees.
Herb Meiberger, whose term expires in February, is fighting to keep his spot on the seven-member board of the $20.9 billion retirement system, where he has opposed hedge fund investments. His rival for the seat, Al Casciato, says Mr. Meiberger is “an obstructionist” who has delayed investments and cost the system millions of dollars in potential investment earnings.
Two board members who declined to be identified said frequent disputes between Mr. Meiberger, a self-styled watchdog and former pension staff analyst, and fellow board members and investment staff are a key reason why the pension fund hired Funston Advisory Services LLC to evaluate the board's governance procedures.
Rick Funston, managing partner, said Funston Advisory began work in December and will be monitoring board meetings over the next few months with the goal of improving fund governance.
The rare public debate about board governance and investments in a campaign for a five-year, unpaid seat on the board is being waged through personal appearances before city unions and a social media campaign using Facebook and YouTube.
Sixty thousand city employees and retirees have until Feb. 3 to return ballots, which will be counted Feb. 6.
One video ad in support of Mr. Casciato, a retired police captain, takes direct aim at Mr. Meiberger. “Herb Meiberger, the obstructionist, in just one month cost you $37 million,” says a narrator. The ad maintains that the retirement system missed $37 million in investment gains because Mr. Meiberger voted in May 2016 against investing $400 million of system assets with two China-based asset managers.
The 3-3 vote hamstrung action on the proposal until October, when it was unanimously approved. At the October meeting, Chief Investment Officer William Coaker Jr. said the five-month delay had cost the system $37 million in lost investment earnings, a figure Mr. Meiberger disputes.
Mr. Meiberger said he changed his mind and voted for the proposal in October because he conducted his own due diligence and determined it was a good investment.
Mr. Meiberger, who has served on the board for almost 25 years and was a securities analyst for the SFERS investment office until he retired in 2006, had made hedge fund investing a part of his campaign. He doesn't mention Mr. Casciato by name, but in Mr. Meiberger's own video campaign ad, he associates his opponent with hedge funds.
“I have seen San Francisco shift from a community where people help each other into being a playground for the rich,” Mr. Meiberger says. “Billionaire hedge fund managers are making money off your backs.”
The investment debate is taking place as the retirement system reported investment returns of 1.3% for the fiscal year ended June 30. That compares with a median return for public plans above $1 billion in assets of 0.97%, shows the Wilshire Trust Universe Comparison Service.
For the five-year period ended June 30, the San Francisco system earned an annualized return of 7.5% compared with Wilshire's 6.96% median return for public plans larger than $1 billion.