Rukaiyah Adams, the new chairwoman of the Oregon Investment Council, Tigard, would like the panel to focus on the big picture, including the complexity and illiquidity in its portfolios.
“Are we getting what we need from the complexity of the model and the illiquidity?” Ms. Adams asked in an interview.
The council oversees the $70 billion Oregon Public Employees Retirement Fund, Salem.
In a March 14 letter to the five other members of the council, including new state Treasurer Tobias Read and Chief Investment Officer John Skjervem that was obtained by Pensions & Investments, Ms. Adams suggested short-term and longer-term priorities for the coming few years.
Although historically the pension fund's $13.9 billion private equity portfolio has performed better than its $37.7 billion in public equity, industry experts suggest private equity performance is trending downward, Ms. Adams noted in the letter.
“It is not clear whether our historic commitment to private equity will continue to realize a return premium relative to simpler, less costly and more liquid public market alternatives,” she wrote.
Short-term priorities include ensuring adequate liquidity, because the pension fund currently pays out more in benefits than the sum of investment earnings, wrote Ms. Adams, who is also the chief investment officer of the $800 million Meyer Memorial Trust, Portland.
The council needs to acknowledge and clearly communicate to its stakeholders how much cash is required so short-term liabilities are not met from the sale of long-term assets and the cost of holding excess cash. Another short-term priority is communicating with stakeholders the connection between the pension fund's asset allocation and its funded status.
Both Messrs. Read and Skjervem applauded Ms. Adams efforts to clearly set possible future priorities for the council.
Mr. Read said the council should be more concerned with big investment trends rather than focusing on individual investment transactions as much as it does now.
The council's “job is to think about the big trends. ... We need more staff and that is part of our effort in the Legislature” to get budget approval to increase investment staff, Mr. Read said.
Ms. Adams is bringing up strategic issues for the council, Mr. Skjervem said.
“I don't know if the council's highest and best use is riding shotgun on staff on transaction-related activity,” he said.
