The Board of Trustees has delegated the oversight of the investment program to the Finance Committee, a sub-committee of the Board of Trustees with the responsibility to oversee the Plans’ investment portfolios. The Finance Committee, with advice and support from the Pension Plans’ investment consultant, Cambridge Associates, and actuary, Milliman, determines the level of acceptable investment risk, and expected return goals, approves and reviews the allocation of assets, establishes the Plans’ formal Investment Policy and retains, monitors, and (if necessary) terminates investment managers and consultants.
With the advice of consultants, the Finance Committee also ensures the Pension Plans are well diversified by asset class and investment style. The Pension Plans are invested in a wide range of investment vehicles from highly liquid, separately managed investment accounts for stocks, bonds and other securities, to a variety of index funds and other pooled funds, real estate funds and less liquid private equity and hedge fund investments.
A global independent investment firm that specializes in providing non-discretionary and discretionary services to pension funds, multi-employer funds, endowments, foundations, private families and other non-profit organizations. Cambridge Associates advises on nearly $390 billion dollars in assets and has a history dating back to the early 1970s. Cambridge Associates is not affiliated with any brokerage firm, does not sell any proprietary product and receives compensation only from its asset owner clients. Cambridge Associates’ expertise includes:
A global independent investment firm that specializes in providing non-discretionary and discretionary services to pension funds, multi-employer funds, endowments, foundations, private families and other non-profit organizations. Cambridge Associates advises on nearly $390 billion dollars in assets and has a history dating back to the early 1970s. Cambridge Associates is not affiliated with any brokerage firm, does not sell any proprietary product and receives compensation only from its asset owner clients. Cambridge Associates’ expertise includes:
A benefits and actuarial consulting firm. They serve as actuaries and benefits consultants to multiemployer, single employer and public pension plans, with a special emphasis on multiemployer labor-management pension consulting. Milliman's focus is to help plan sponsors provide secure, reliable pension income to plan participants and their beneficiaries. The firm’s responsibilities include:
A benefits and actuarial consulting firm. They serve as actuaries and benefits consultants to multiemployer, single employer and public pension plans, with a special emphasis on multiemployer labor-management pension consulting. Milliman's focus is to help plan sponsors provide secure, reliable pension income to plan participants and their beneficiaries. The firm’s responsibilities include:
Hires both active and passive managers. Active managers are free to buy and sell securities within the Pension Plans’ policy guidelines and employ a decision-making process that may include fundamental and/or quantitative analysis. Their objective is to outperform the benchmark they are measured against. Passive managers generally replicate an index and track the performance of their benchmark. Investment fees for passive managers are generally lower than for active managers.
Hires both active and passive managers. Active managers are free to buy and sell securities within the Pension Plans’ policy guidelines and employ a decision-making process that may include fundamental and/or quantitative analysis. Their objective is to outperform the benchmark they are measured against. Passive managers generally replicate an index and track the performance of their benchmark. Investment fees for passive managers are generally lower than for active managers.
The fees paid for investment management services are generally based on a percentage of assets under management and vary quite a bit from manager to manager and investment to investment. The amount of fees charged is one of the factors considered by the Finance Committee and Cambridge Associates when comparing investment managers and making hiring decisions (along with a number of other factors, such as expertise, management style, historical performance and risk characteristics). The overall average cost of the investment program is approximately 0.7% (70 basis points) per Plan including administration. Investment strategies, asset allocation and investment managers are continually monitored and subject to change at any time. Asset allocations and investment managers are reported “as of” a certain date (for example a calendar quarter). That measurement date may change from time to time.
