Tennessee Consolidated learns from past crises and had plans in place

Tennessee Consolidated Retirement System, Nashville, has been operating smoothly during the course of the COVID-19 pandemic primarily because of past crises that had the pension fund well prepared in disaster recovery, said Michael Brakebill, chief investment officer, in an interview.

While other asset owners have attributed preparedness to the financial crisis of 2008, Mr. Brakebill, who has been CIO of the $55.2 billion pension fund since spring 2008, said it was the devastating Nashville flood of May 2010 that prepared the pension fund operationally.

According to the city of Nashville's website, the flood was the result of a 13-inch rainfall in a 36-hour period, which caused the Cumberland River to crest 12 feet above flood stage in Nashville. The flood resulted in 11 deaths and $2 billion in property damage.

"The flood was a big deal and just devastated downtown, and we got kind of booted out of our offices even though we're up on a hill," Mr. Brakebill said. "The building itself had some issues and failed, so after that experience, the treasurer (David H. Lillard Jr.) said we've got to really work on our disaster recovery, because that was a mess."

The response of Mr. Lillard, who as state treasurer still oversees TCRS today, has served the pension fund well, Mr. Brakebill said.

"All had their laptops and went home and started working, and it was all pretty seamless," he said.

On the investment side, the pension fund has held up well during every phase of the unprecedented coronavirus crisis, even during what Mr. Brakebill calls Phase Two of the crisis.

"That was largely almost a derivative dollar shortage funding crisis, right? Where basically all these companies couldn't get a hold of dollars, and there was this global breakdown. It was just stunning. It did feel like we were back in the fall of 2008 all over again," Mr. Brakebill said.

"In the middle of the downdraft phase, we were just kind of hanging on, not really doing a whole lot. We didn't have any major allocation decisions, we were probably raising a little bit of cash," he said.

The feeling now, he said, is that the worst is over, that the markets feel we're going to normalize somehow.

"It's truly stunning that markets are anywhere near where they are right now," Mr. Brakebill said.