Deals and People March 7, 2011

Forward Announces Hire to Lead Alternative Investment Expansion

March 7, 2011 (PLANSPONSOR.com) - Forward Management, LLC has announced an initiative to accelerate the firm’s development of alternative investment products in both mutual fund and private partnership form.
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David Readerman will be working to expand Forward’s incubation of new investment strategies while enriching the firm’s investment research across equity product categories, according to the announcement. He will be lead portfolio manager for the first product he is helping Forward to develop, a global “go-anywhere” equity strategy.   

In addition to developing and managing alternative investment strategies, Readerman is serving as co-portfolio manager of the Forward Small Cap Equity Fund.   

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Readerman joined Forward after a seven year tenure at Marsico Capital Management, where he was a senior investment analyst with research responsibilities in global equity portfolios spanning technology, energy, consumer, and industrial sectors. He was previously a founding partner with Thomas Weisel Partners Group, Inc., and earlier led the software and Internet teams at Montgomery Securities. His twenty years of sell-side experience included stints with Shearson Lehman Hutton and Smith Barney.   

Readerman holds an MBA in Finance from New York University’s Leonard N. Stern School of Business.

According to the announcement, in recent years Forward has built a set of 15 alternative mutual funds, separate account strategies and private funds representing over $3 billion in assets out of Forward’s total of $6.7 in assets under management (as of January 31, 2011). Under the heading of “alternative,” Forward includes products that either provide exposure to alternative asset classes, such as real estate, commodities, and frontier markets, or apply alternative techniques, such as hedging and long/short investing, to equity and fixed-income strategies.

Administration March 7, 2011

Pension Funding Slowly Recovering

March 7, 2011 (PLANSPONSOR.com) – Wilshire Consulting’s 2011 Report on State Retirement Systems shows a slight uptick in funded status of state pension systems.
Reported by

Wilshire Consulting estimates that the ratio of pension assets-to-liabilities for all 126 state pension plans in its analysis was 69% in 2010, up from an estimated 65% in 2009 (see Wilshire Study Paints Picture of Recession’s Effect on Pension Funding). Wilshire says this improvement in funding ratio reflects the U.S. economy’s ongoing recovery from the global market dislocation events of 2007 and 2008, and the resultant recession that economists declared ended in June 2009.  

For the 99 state retirement systems that reported actuarial data for 2010, pension assets and liabilities were $1,671.4 billion and $2,538.4 billion, respectively. The funding ratio for these 99 state pension plans was 66% in 2010, up from 62% for the same plans in 2009.   

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For these systems, pension assets grew by 9.3%, or $141.8 billion, from $1,529.6 billion in 2009 to $1,671.4 billion in 2010 while liabilities grew 2.4%, or $59.6 billion, from $2,478.8 billion in 2009 to $2,538.4 billion in 2010. The increase in asset values offset the continued steady growth in liabilities for the 99 state pension plans and led to a drop in the aggregate shortfall, as the -$949.2 billion shortfall in 2009 narrowed to a -$867.0 billion shortfall in 2010.   

The report said 99% of these plans are underfunded. The average underfunded plan has a ratio of assets-to-liabilities equal to 65%.   

For the 125 state retirement systems that reported actuarial data for 2009, pension assets and liabilities were $2,014.4 billion and $3,113.3 billion, respectively. The funding ratio for these 125 state pension plans was 65% in 2009.   

Of these plans, 100% are underfunded. The average plan has a ratio of assets-to-liabilities equal to 66%.   

State pension portfolios have, on average, a 63.6% allocation to equities – including real estate and private equity – and a 36.4% allocation to fixed income. The 63.6% equity allocation is lower than the 65.0% equity allocation in 2000 and largely reflects a rotation out of U.S. public equities.   

Asset allocation varies by retirement system. Nine of 126 retirement systems have allocations to equity that equal or exceed 75%, and 12 systems have an equity allocation below 50%. The 25th and 75th percentile range for equity allocation is 57.3% to 70.7%.   

Wilshire forecasts a long-term median plan return equal to 6.5% per annum, which is 1.5 percentage points below the median actuarial interest rate assumption of 8.0%.   

The report will be available at http://www.wilshire.com/BusinessUnits/Consulting/Investment/.

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