All things must pass, even at the $34 billion Massachusetts state pension fund, which after two decades has hired a new investment-consulting firm.
Chicago-based Ennis, Knupp & Associates will provide general and alternative-strategies programs. Being replaced is Stephen Nesbitt of consulting firm Cliffwater, based in Marina del Rey, California. Nesbitt had served the Massachusetts Pension Reserves Investment Management Board as general consultant (originally through Santa Monica–based Wilshire Associates) since the mid-1980s and as hedge fund consultant since 2006. The move appears to have been precipitated by Cliffwater’s announcement last year that because of a change in business strategy, it would no longer offer general investment advice.
“We were very pleased and impressed by what we saw during the procurement process,” Michael Travaglini, head of PRIM, says of Ennis Knupp. “They’ve built a solid investment-consulting business that is focused on the institutional marketplace. It’s a deep firm with an abundance of resources ranging from due diligence to manager research.”
PRIM estimates that it will avoid paying an additional $1 million in fees annually by continuing to employ a consulting firm that provides combined services. “While it’s not something that we’re required to have, it seemed logical to find a replacement firm that had both capabilities,” Travaglini notes.
As its first order of business, Ennis Knupp will analyze the pension fund’s liabilities, which, like those of many defined benefits programs, have been severely affected by recent market events. “It will give us a chance to review our inventory and see how much damage was done and what our current funded status looks like,” Travaglini says.
The PRIM head does not rule out making more changes to its roster of fund-of-funds managers, based on the new firm’s recommendations. Recent terminations include Jericho, New York–based Ivy Asset Management as well as Austin, Texas–based Austin Capital Management, a fund of funds reported to have lost $12 million through Bernard L. Madoff Investment Securities.
