News: 2005 1st Quarter

IFS was selected as the on-going retainer investment consultant to the Trustees of the Trucking Employees of North Jersey Pension, Welfare and Annuity Plans and the Teamsters Industrial Employees Pension and Welfare Plans.

• Pennsylvania Public School and State Employees Retirement Systems and Department of the Auditor General
  These two statewide funds and the Auditor General have jointly retained IFS to conduct a comprehensive fiduciary review of the investment programs and practices of the funds and to provide support for the Auditor General's performance audit on several topics regarding those funds. Among the subjects IFS will evaluate, compared to industry best practices, are the fund's investment processes and policies concerning asset allocation, manager selection, risk management, brokerage, custody, securities class action litigation, staffing and resources and other matters.
• Indiana State Teachers' Retirement Fund
  IFS was hired to develop an operational protocol and a policy statement concerning the Fund's securities class action monitoring processes.
• The Children's Hospital, Cincinnati Ohio
  IFS has been hired by The Children's Hospital in Cincinnati to review its endowment's relationship with its investment consultant and its brokerage practices.

The trustee of a series of labor-sensitive commingled real estate funds hired IFS as an independent fiduciary to opine as to whether the proposed merger of several of those funds-- which invest only in particular states-- into a more broadly diversified fund-- which invests across a larger geographic area-- is in the collective interest of the investors of each state fund. We submitted our opinion in January regarding all four of the state funds.

IFS recently completed a search for a long-duration fixed income investment fund manager for the Plans.

The Bureau of Asset Management for the New York City Retirement Systems plans to nearly double its internal investment staff by hiring 40 additional people over the next 18 months to oversee the Systems' allocations to private equity, real estate and possibly hedge funds…. Adam Blumenthal, the city's first deputy comptroller/CFO who also helps oversee the city's $88 billion Systems, said a recent audit conducted by Independent Fiduciary Services suggested that additional personnel were needed.

Montana Board of Investments, Helena, is reviewing Independent Fiduciary Services' preliminary report, which evaluates the investment program and practices of the $6.2 billion system, said Carroll South, executive director. He said the report includes recommendations about the Board's asset allocation as well as proposed additions to its investment policy.

Independent Fiduciary Services, is performing a one-time Operational Review of the $6.2 billion pension system, Montana Board of Investments, and is slated to present its final report at the April meeting of the board.

Pennsylvania Public School Employees' Retirement System and the Pennsylvania State Employees' Retirement System, both of Harrisburg, today signed an agreement with Auditor General Jack Wagner allowing state audits of the two funds' investment performance... The auditor general's office and the two funds also signed a contract with Independent Fiduciary Services... IFS will conduct a fiduciary review of operations at each fund and will assist with the audits. The audits and IFS' fiduciary review are set to begin immediately; there is no timetable on completion. The audits will examine the funds' selection and monitoring of investment managers, advisers and consultants, as well as organizational structures and resources. They will also look at the funds' efforts to recover money lost in corporate scandals.

Edward D. Patchett authored a chapter titled Alternative Investments: An Introduction in the 2004 edition of Employee Benefit Issues - The Multiemployer Perspective published by the International Foundation of Employee Benefit Plans. The chapter provides an overview of the investment characteristics and risks associated with investing in private equity, hedge funds and managed futures (copies of this article are available upon request)

Lamont E. Tarbox authored a chapter on Economically Targeted Investing recently published by The International Foundation of Employee Benefit Plans in the Fifth Edition of the Investment Policy Guidebook for Trustees. The chapter discusses the evolution of ETI's over the last twenty five years, how the definition of ETI's has changed, and the response of regulators. He writes "[t]he key insight in the ETI approach is to say that if two investments have a reasonable expectation of similar returns, then investors have the right to consider which of the two offer further secondary benefits of value to plan participants." (copies are available upon request)

Andrew (Andy) Irving was a Contributing Author of the Report of Subcommittee on Fiduciary Responsibility presented to the Mid-Winter Meeting of the Employee Benefits Committee on February 9-12 in San Francisco. Mr. Irving wrote the "Prohibited Transactions" section of the Report.

Global Pensions Magazine, February 2005, ran a "comment" from Samuel ("Skip") Halpern entitled "Objectivity at a Price." This explained how some investment consulting firms have taken certain steps to alleviate some conflicts of interest, but that many further steps are necessary to eliminate more conflicts.

Andrew (Andy) Irving presented a session called "DoL Class Exemption 2003-39" at the January 6 program on Employee Benefits in Aspen. CO. This exemption requires use of an independent fiduciary when a plan seeks to release a party in interest from legal liability, e.g., when a plan that owns employer stock is a member of a class of plaintiff investors in that stock, settling claims against the employer for securities fraud.

Lamont (Monte) E. Tarbox participated on a panel of five consultants who each presented a forecast of long term capital markets and recommended asset allocations for trustees to consider over the coming years.

Jeanna M. Cullins presented a session on "Fiduciary Responsibilities and Ethics" at the February 8th Annual Trustee Retreat

IFS recently hired Irving P. Rotkowitz as a Senior Vice President. Mr. Rotkowitz has had a 35 year career in the pension and investment business. At IFS he will be involved in retainer consulting, Operational Reviews and internal operational matters. Before joining IFS, he was an Account Manager and Senior Vice President at Oppenheimer Capital, responsible for many of the firm's largest jointly trusteed clients. Prior to joining Oppenheimer, he had an extensive career with the Segal Company, both in the investment consulting group (Segal Advisors) and as an actuary.