CONTROLLER SAYS RE-VAMPED COUNTY PENSION FUND THE BEST-RUN PLAN IN PA
NEW INVESTMENT POLICY BANS INVESTMENTS IN NATIONS THAT SPONSOR TERROR AND HEDGE FUNDS THAT CONDUCT HOSTILE TAKEOVERS OF PUBLIC COMPANIES
NORRISTOWN, PA, August 16, 2007 – Montgomery County Controller Eric Kretschman today announced the completion of a nearly year-long process to overhaul the management of the county’s pension fund. That process began with a search for a new pension fund consultant and ended with the county revamping its investment policy and cutting management fees.
“The first thing we did was search for a pension fund consultant that could steer us with a clear direction into the future. We found that consultant through a competitive bidding process and the new consultant, Cornerstone Advisors Asset Management, has been a great choice,” noted Kretschman.
With Cornerstone’s help, the county re-shuffled its investment manager line-up. “The investment managers are actually the firms that manage the county’s money and make investment decisions. Cornerstone acts as the “head coach” in this instance, making sure that the county has a solid game plan and that all of the parts are working together,” said Kretschman.
According to Kretschman, the county indexed a number of its large cap equity investments and bonds. Indexing is a way to invest in the market itself or a segment of the market rather than actively trying to pick stock as “beat the market.” “We did this in areas where it’s very hard to beat the market and you get very few gains from trying to pick stocks or bonds and time the market,” said Kretschman. By indexing, the county did, however, save money on manager fees. All told, the county will save about $100,000 in manager fees starting this year based on indexing and other changes.
In addition to indexing, the county also hired Logan Capital in the large cap growth area, Sterling Capital in the small cap value arena, and PMG and JP Morgan to oversee fixed asset investing (bonds). Kretschman was also quick to give praise to the county’s existing stable of managers. “They are the ones who have gotten us to where we are and have made the MontgomeryCounty pension fund clearly the best run plan in the Commonwealth.”
Kretschman also noted the benefits of county’s new investment policy. He pointed out that the old policy was adequate but did not take into account the current economic and politic environments. For instance, Kretschman himself inserted language in the policy that would ban county investment managers from investing in nations that are on the State Department’s list of terror sponsors. He also inserted a clause that prevents the county from investing in hedge funds or private equity firms that take part in hostile takeovers of public companies. “I believe that takeovers and consolidations can be good for the market and shareholders, but invariably people lose jobs as part of these takeovers and I didn’t think the county should be subsidizing that or profiting from it,” he said.
The controller also heaped praises on the county commissioners, Tom Ellis, Jim Matthews and Ruth Damsker, and the county treasurer, Garrett Page, who all sit on the Retirement Board, along with the controller. The Retirement Board oversees the pension fund. Kretschman noted that the entire board deserved credit for the pension fund’s success. “The commissioners, under chairman Ellis, really did a great job on this issue.”
The county controller serves as the secretary of the Retirement Board and oversees its day-to-day administration.
Contact Information:
Eric S. Kretschman, Controller
MontgomeryCounty
MontgomeryCounty Courthouse Post Office Box 311 Norristown, PA19404
