Chicago Policemen s Annuity & Benefit Fund Investment Vendors Diversity and Inclusion Review

Transcription

1 Chicago Policemen s Annuity & Benefit Fund Investment Vendors Diversity and Inclusion Review Presented to: The Illinois Senate Special Committee on State and Pension Fund Investments October 16, 2018

2 DIVERSITY IN ACTION DIVERSITY IN ACTION Active Engagement Increasing Diversity Across the Board Open RFPs The investment staff has an open door policy and employs a meeting target of 5% for diverse managers During 2017, the Fund s CIO had 249 manager meetings, 11% of these meetings were with diverse managers For the year to date as of June 2018, the Fund s CIO had 134 manager meetings, 9% were with diverse managers In addition to our express goals, we focus on ensuring diversity across our majority owned managers client teams and on an annual basis request diversity and EEOC data 2 out of 3 of the Fund s interns have been minority or women In compliance with Public Act , diverse managers are exempt from minimum qualifications related to assets under management and firm/team tenure 1

3 STAFF AND BOARD OF TRUSTEES Senior Fund Staff Board of Trustees Regina Tuczak Executive Director Non Minority Female* Kenneth A. Hauser President Elected Retiree Representative Tom Beyna Investment Committee Chair Elected Patrolmen Representative Aoifinn Devitt Chief Investment Officer Non Minority Female* Carol Hamburger Vice President Appointed Trustee Non Minority Female* Brian E. Wright Recording Secretary Elected Sergeant Representative Carole Brown Appointed Trustee African American Female* Haydee Caldero Appointed Trustee Latino Female* Caroline Vullmahn Comptroller Non Minority Female* Edward M. Wodnicki Elected Lieutenant Representative Kurt A. Summers, Jr. Appointed Trustee African American Male* *women and/or person of color 2

4 DIVERSITY IN ACTION MWDBE MANAGER AND BROKERAGE GOALS Our goals for manager allocations are as follows: Our goals regarding usage of diverse brokers are as follows: Asset Class Target Range Asset Class Target Brokerage Goals Equities 11-13% Fixed Income 3-5% Alternatives 4-5% Domestic Equity International Equity Fixed Income 35% of Total Commissions 10% of Total Commissions 25% of Total Volume Traded 3

5 INVESTMENT MANAGERS POLICY GOALS & RESULTS At the end of CY 2017, Chicago Police Pension Fund had $305.6 million or 12% of the Fund s assets allocated to MWDBE managers CPABF has exceeded its goals in each asset class for the year MWDBE Allocation vs Goal* 12% 11% Historically, diverse managers have been underrepresented in alternative asset classes, CPABF is proud to actively source and invest with diverse managers in this space CPABF retained an Illinois based, woman owned long short equity hedge fund ( Pluscios ) CPABF allocated an additional $28 million to a woman and minority owned hedge fund ( BluePrint ) CPABF allocated an additional $10 million to a woman owned real estate fund ( SoundMark ) 5% 3% 5% 4% Alternatives Equities Fixed Income Allocation Target MWDBE % of Total* CPABF encourages MWDBE firms to submit responses for RFPs the Fund issues MWDBE firms are exempt from any minimum qualifications related to assets under management and team/firm tenure This has resulted in more diverse managers submitting responses for RFPs issued African- American, 4% Non Minority, 88% Latino(a), 4% Female, 2% Other, 2% Notes: Data as of 12/31/2017 *Data for private markets is based on NAV as of September 30,

6 FEES PAID TO MWDBE MANAGERS MWDBE Fee Paid by Asset Class 22% At the end of CY 2017, 13% of the investment management fees paid went to MWDBE firms We expect that number to increase as the Fund s alternative managers call capital 3% Alternatives Equities Fixed Income 13% 100% of the Fund s MWDBE allocation is actively managed. This means more fees for MWDBE managers. MWDBE Fee Paid by % of Total African American, 7% Latino, 2% Female, 2% Other, 2% Majority, 87% Notes: Data as of 12/31/2017 African American Female Latino Other 5

7 BROKERAGE GOALS & RESULTS MWDBE Brokerage Commissions 35% 27% 28% 45% MWDBE brokerage commissions paid exceeds our targets, but we will continue to seek improvement and usage of a broader range of brokerage 25% The Fund does not allow step outs to count toward brokerage goals 10% Domestic Equity International Equity Fixed Income Commissions Paid/Volume Traded Brokerage Target Notes: Data as of 12/31/2017 6

8 CLOSING REMARKS Looking to the Future With an increased level of contributions from the City of Chicago experienced in 2016 and 2017, we expect to see a gradual improvement of our funded status and more opportunities to make new investments and upgrade our current portfolio. As we rationalize our portfolios, we will be seeking to increase allocations to our best performing MWDBE managers and actively seeking new candidates, particularly in alternatives. We continue to work with our managers to encourage usage of a wide range of minority brokerage firms. 7