What did we learn during Day 2 of General Session at #NCPERS16?
During Day 2 of the Annual Conference & Exhibition, General Session focused on investments and governance.
1. Defined Benefit model is the right model. It can be very flexible, with many different features.
2. We need to think on the long-term and not get caught in the short-term.
3. You need a governance process so that if you use leverage you don't annihilate the plan.
4. The numbers you see are the rates the central banks are paying to issue debt, actual market rates are higher, but that doesn't mean there aren't securities that are issuing higher yields.
5. What worries plan investment officers for the short-term? Liquidity, failure to make sure all of our trustees feel secure about decisions, and another liquidity crisis.
6. 35% of emerging markets are in index funds.
7. Management fees are important, but other hidden costs (trustee fees, fund accounting, custody, transfer agent, legal/ audit, index license fees) are equally if not more significant.
8. Governance is about defining who makes decisions and developing and documenting processes to do so.
9. A successful investment program is based on a strong philosophy regarding the long term goals of the program and the long term behavior of capital markets.
10. An investment committee is the best way to get your board members involved in investment decisions.