Former NC Pension advisor says SEANC’s analysis is flawed

Posted by David Bracken on December 11, 2013 

Andrew Silton, a former chief investment adviser for the North Carolina state pension fund and the author of a blog called Meditations on Money Management, says the state public employees organization’s recent criticism of the pension fund’s performance is misguided.

In a blog post, Silton says the fund’s recent results are acceptable and consistent with the way the fund’s been managed for decades.

“I’ve looked at the same set of numbers that prompted SEANC’s diatribe, and I see a perfectly acceptable set of financial returns,” Silton writes. “In fact, both the short-term and long-term results are entirely consistent with the conservative investment philosophy espoused by Treasurers Boyles, Moore, and Cowell over the past three decades.”

Silton, who writes a semi-monthly column for The News and Observer, also says that SEANC’s tying of the perceived poor performance of the fund to its investment in alternative investments is “completely wrong.”

“Anyone who has read my blog knows that I am not an advocate of public pension plans making large allocations to alternative investments,” Silton writes. “And it’s clear from looking at the pension’s current asset allocation that alternative investments have increased substantially in the past several years. SEANC blames the increase in alternatives for what they see as the pension plan’s poor investment performance. SEANC’s contentions are completely wrong.”

Silton says SEANC misstates the increase in alternative investments under Cowell’s leadership, and says most of the alternative investments are relatively new and thus haven’t had time to help or hurt the fund’s performance.

SEANC has been critical of Cowell’s desire to put more of the pension fund’s investments into private equity and hedge funds.

Cowell asked the legislature earlier this year to give her more flexibility in the investments. The governor signed a bill into law allowing the treasurer to invest 35 percent of the retirement system in alternatives.

Cowell’s office has also said SEANC’s criticism is inaccurate because it is comparing the fund’s quarterly return with its targeted annual rate of return.

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