R P E N M
Retired Public Employees of New Mexico
Bob Gish E-mail Response
The following is Bob Gish's response to a Business Week article about PERA investments.
Hello Everyone!
Bob Gish, PERA Investment Director, sent this response to us regarding a recent article in "Business Week" magazine regarding PERA investments. The article follows Bob's response. Note the many inaccuracies in the article. PERA is doing well.
We will be posting this information on the RPENM Website.
Ann
---------------------------------------
(Response from Bob Gish):
We are preparing a response. Needless to say, the article is slanted against defined benefit plans’ and second against hedge funds using PERA, out of context, as a “bad” example. As you know, we are 94% fund (probably 96-97% now) compared to many other public pension plans. I assume BW got their funding deficit numbers from NASRA or someone else.
Inaccuracies include:
1. PERA’s current funding status as you know is quite high. The dollar amounts used were FY06 not FY07 after our returns were 18.08%.
2. Hedge Fund losses were a negligible amount (both dollars and percentages) of the decline in the market value of the fund since 6/30/07. Most of the $300 million in losses were attributable to stocks ($275 million), bonds ($22 million) and hedge funds ($3 million). From the worst day since June 30, hedge fund losses were about the same, $3 million, vs. almost $600 million in stocks. The article falsely concludes and is written so its readers might also conclude that hedge funds are the source of the decline. This is blatantly incorrect.
3. While I do not expect hedge funds to experience the returns of the past 10-years, as an asset class they should continue to outperform fixed-income (not stocks), at risk levels comparable to or less than fixed-income in some instances due to low correlation with bonds.
Bob Gish, PERA Investment Director, sent this response to us regarding a recent article in "Business Week" magazine regarding PERA investments. The article follows Bob's response. Note the many inaccuracies in the article. PERA is doing well.
We will be posting this information on the RPENM Website.
Ann
---------------------------------------
(Response from Bob Gish):
We are preparing a response. Needless to say, the article is slanted against defined benefit plans’ and second against hedge funds using PERA, out of context, as a “bad” example. As you know, we are 94% fund (probably 96-97% now) compared to many other public pension plans. I assume BW got their funding deficit numbers from NASRA or someone else.
Inaccuracies include:
1. PERA’s current funding status as you know is quite high. The dollar amounts used were FY06 not FY07 after our returns were 18.08%.
2. Hedge Fund losses were a negligible amount (both dollars and percentages) of the decline in the market value of the fund since 6/30/07. Most of the $300 million in losses were attributable to stocks ($275 million), bonds ($22 million) and hedge funds ($3 million). From the worst day since June 30, hedge fund losses were about the same, $3 million, vs. almost $600 million in stocks. The article falsely concludes and is written so its readers might also conclude that hedge funds are the source of the decline. This is blatantly incorrect.
3. While I do not expect hedge funds to experience the returns of the past 10-years, as an asset class they should continue to outperform fixed-income (not stocks), at risk levels comparable to or less than fixed-income in some instances due to low correlation with bonds.