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NCRS Pension and Treasurer Folwell

Sun, 26 Nov 2017 00:46:23 GMT

Bottom line: NC Treasurer Dale Folwell is headed in the right direction. But, progress is never a straight line.  


Treasurer Folwell impressed me by freezing new commitments to alternative investments.  He further impressed me by quickly firing a dozen active equity managers. But, I was disappointed that the $7 Billion of equities was liquidated instead of being transferred to index managers.  This lowered the equity exposure of the pension portfolio from 44% to 37% at a time that equities rose 10-15%. 

However, to be fair, the self-described longterm target allocation to equities is 42% for the NC pension.  Thus, liquidating some of the fired manager portfolios made sense as the fund was essentially 2% over-weight equities. And, the current allocation of 38% is well within the self-imposed guidelines of the fund of 37-47% equities.  

Treasurer Folwell will likely face criticism from the investment industry for his strategy of moving away from trendy, expensive alternative investments and toward low-cost inhouse indexing.  (A strategy I fully support!) Thus, the treasurer can’t really afford the distraction of further criticism for straying from longterm asset allocation targets. 

Hopefully Treasurer Folwell will ignore the barking from Monday-morning quarterbacks, continue to resist pressure to make new investments, and resume his intense focus on cutting manager fees by moving toward low-cost, inhouse passive managent of plain vanilla stocks and bonds.