Annually, the board meets to review the FSMSS investment portfolio with its investment consulting firm, Raymond James. During the meeting, the performance metrics for the previous year are reviewed in detail and presentations are heard from the portfolio’s investment managers. The portfolio has the usual asset classes including US equities, US fixed income, international equities and two alternative investment classes. These classes are further broken down into eight sub classes to allow for the most optimum diversity to ensure that the portfolio achieves a nominal return rate of 7.5% while keeping risk at an acceptable level.
The Annual Investment Review for CY2017 took place in Guam on February 8 and 9, 2018. Present at the meeting were Chairman of the Board and representative of Pohnpei, Jack Harris; Vice-chairman of the Board and representative of Yap, Vincent Tafileluw; representative of the National Government, Kohsak Keller; representative of Chuuk, Nakama Sana; and Administrator Alexander R. Narruhn serving as ex-officio member.
Daniel Roland and Jayson Miyashita of Asia Pacific Group, Raymond James facilitated the meeting as the portfolio’s full time investment consultants.
As of December 31, 2017, the portfolio was valued at $51,456,340 after a stellar year that saw a gain of 15.26%. This rate of return outperformed the policy index which was at 12.15% and exceeded the portfolio’s target performance of 7.5%. The best performing asset classes were stocks or equities which performed quite well during the year in the market overall. 2017 was also a good year for international equities which saw a rate of return of 27.46%.
The money managers that the board met with included representatives from Winslow Capital, Aristotle Capital Management, Tortoise Capital, Renaissance Investment Management, Adelante Capital Management and Garcia Hamilton & Associates.
During the meeting, the board decided to terminate the services of small/mid-capitalization core equity manager Golden Capital Management due to the fact that it had not sent representatives to the annual investment review for the second year in a row. The board decided to transfer 5% of the portfolio under Golden Capital Management to Renaissance Investment Management for investment in the international equity space and authorized the remainder of the funds with Golden Capital Management to be invested in the small/mid-capitalization core index.
The board members were pleased with the performance of the portfolio and encouraged the investment consultant and money managers to continue in their efforts to ensure that the portfolio continued to meet its target earnings.