County pension fund investments beat the market

Joseph DiStefano of The Inquirer writes about the success of Montgomery County’s new pension fund investment strategy since its implementation one year ago:

Montco’s returns for the year ended June 30, after paying fees: 16.23%.
Vs. the fund’s “portfolio specific market benchmark,” which returned 15.9%.
That’s double the pension’s “actuarial earning assumption” target of 7.5% a year, thanks mostly to the bull market in stocks.

Here’s the breakdown between the 90% of Montco pension investments indexed by Vanguard and the 10% managed by SEI:
Vanguard stocks and bonds: 16.4%; which beats the fund’s benchmark target of 16.04%.
SEI alternative investments: 16.23%; vs. benchmark 15.9%.

Montco reports a reduction in money management fees from 44 basis points (0.0044%, about $2.1 million) to a little under 18 basis points (0.0018%, approx. $880,000). Which Shapiro figures is like a savings of $1.2 million.

Click here to read the entire article.


Pension Fund Takes Neighborly Advice

Michael Corkery and Kirsten Grind of the Wall Street Journal report:

When officials with Montgomery County, Pa., became troubled by their pension fund’s investment fees and recent performance, they turned to a neighbor for advice. His take: Park money in low-cost index funds.

And that is what they are doing, a move that highlights the growing frustration many pension officials feel toward expensive Wall Street investment managers. The county is now shifting nearly all its $470 million in pension assets to a handful of index funds run by Vanguard Group Inc.

The county, in the Philadelphia suburbs, says the move is expected to reduce investment fees by roughly two-thirds. It will be paying about 0.13% of its pension assets in investment fees by switching 90% of its assets to Vanguard’s funds. It had been paying about 0.43% in fees to its current crop of so-called active and passive managers.

Officials in Montgomery County, home to about 800,000 people, started pondering changes when a new crop of pension board members took office in early 2012, and consulted with a number of investment experts.

Read the entire article here.

Montco changes investment strategy in employee pension plan

Margaret Gibbons of The Intelligencer reports:

Montgomery County is restructuring the way that the county employees’ pension plan is handled.

This restructuring will save the pension plan more than $1 million in fees each year, according to Commissioner Chairman Josh Shapiro.

The three county commissioners, along with the county controller and the county treasurer, sit as the pension board overseeing the plan that has about $452 million in its coffers. There are 1,709 former employees drawing a pension from the plan while 3,285 employees are contributing to it.

Under the restructuring, the pension board is eliminating a consultant and 12 to 15 money managers who each managed a portion of the fund.

Read the entire story here.