Re(1): STATE OF THE PENSION FUND IP: 71.101.149.148 Posted on October 4, 2008 at 02:48:42 PM by Pat Lynch
First off, I’m sorry that I didn’t get this out on Friday like I planned. I ended up having a 21-hour work day on Thursday, working into the early hours of Friday morning. I spent the rest of Friday recouping and catching up on “quality time” with my family.
The Pension Board has an Investment Policy that helps guide and protect our fund. Our main “defense” lays in the hiring of a top-notched Investment Manager. This also works as our best “offense”. Over the past 34 years since Bowen & Hanes has managed our portfolio, they have invested our assets in quality investments, resulting in an average annual rate of return of over 13%. That number is hard to beat among any index or manager.
Our Fund is diversified and large enough to withstand market pressures. We will have up years and we will have down years, that is what happens with the market.
We are also protected by our Asset Allocation, something that all of the experts agree is the most important part of any investment strategy for managing risk. Bowen & Hanes monitors our investments regularly to make sure that we are invested in no more than 65% in stocks, with the remainder in fixed investments. The bonds in our fixed investments are required to have quality grades by the rating agencies. If the bonds fall below a top tier rating, Bowen & Hanes reports it to the Board, along with their recommendation of whether to keep or sell the bonds.
All of the Board’s investment assets are under the control of a third-party Custodian. They make sure that all of our investments are properly executed in the Board’s name.
The Board uses an independent Performance Measurement company to monitor the efforts and results of Bowen & Hanes versus other similar managers and various indexes.
The Board has an independent Certified Public Accountant account for the value of our investments and documents our income and expenses.
Each year the Board undergoes an External Audit and Actuarial Valuation. The Board also submits an annual report to the State of Florida and after their acceptance; the Board receives our share of the state excise tax.
As you can see, it’s a bit more complicated than “buy this” or “sell that”. There are many layers and disciplines involved to protect our fund during the good and bad times. I hope this answers at least some of the questions. Jay Bowen from Bowen & Hanes will be at the October pension meeting for his quarterly update and will give his outlook on the market and current financial conditions. Replies: There have been no replies.
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