By David G. Barry
The North Dakota State Department of Trust Lands, the Employees’ Retirement System of the State of Hawaii (ERS) and the Police and Firemen’s Retirement System of New Jersey (PFRSNJ) are all making progress in their efforts to bring aboard new chief investment officers.
Joseph A. Heringer, the Trust Lands’ Commissioner, tells Markets Group that the $7 billion sovereign wealth fund has started the interview process and that he is “hoping to have someone hired in November.”
The spot became vacant after Michael Shackleford this summer became CIO of the $17 billion Public Employees Retirement Association of New Mexico (PERA). Shackelford held the title of director of investments for three years. The Trust Lands, however, has made the decision to retitle the position as CIO.
Heringer, an attorney, became commissioner in February and has taken a more active role in the investment operation since Shackelford’s departure. He previously had been a senior wealth manager for Bravera Wealth.
The Department of Trust Lands is governed by the Land Board and is responsible for management and oversight of educational trust funds, mineral acres, and other assets for the benefit of public schools and institutions in North Dakota. It has approximately 30 full-time team members with a biennial operating budget of $8 million. It administers approximately $7 billion of financial asset investments, over 706,600 surface acres and more than 2.5 million mineral acres. The department also administers the North Dakota Unclaimed Property statutes and operates the Energy Infrastructure and Impact Office.
ERS, meanwhile, is “on schedule” with its CIO search and expects to make a selection in December, said Thomas “Thom” Williams, the $21.9 billion system’s executive director. Williams said the “hope” is that the position could be occupied during the first quarter of 2023.
“We’re very pleased with the overall quality of applicants and the considerable interest expressed in our position – having received in excess of 250 submissions.”
ERS is seeking to fill a role that became open at the end of June when Elizabeth Burton stepped down after four years as CIO. Burton earlier this summer joined Goldman Sachs Group Inc.’s asset management arm as a managing director and client investment strategist.
Whomever becomes CIO will be stepping into a system that is in particularly good shape. For the fiscal year ended June 30, ERS produced a 3.7% return, beating its benchmark of negative 1.3% by 5%. Howard Hodel has been serving as acting CIO since Burton’s departure. He holds the title of investment manager, risk management.
Meanwhile, PFRSNJ is near the end of its efforts to find an executive search firm to guide its CIO search. The $31 billion system issued a request for qualifications for a search firm in July and said all proposals are due October 31.
In its RFQ, PFRSNJ said there is a “pressing need” to hire a new CIO given the prior CIO’s extensive knowledge of its investment program, including its fixed income and equities, as well as alternative investments in real estate, real assets, private equity and private credit.
Russell Niemie resigned as CIO in March after roughly 18 months in the role. His resignation came after a finding earlier this year that he violated the federal Employee Retirement Income Security Act (ERISA) while serving as CIO of the New York State Nurses Association Pension Plan & Benefits Fund (NYSNA). The violation related to Niemie recommending a contract renewal for White Oak Global Advisors one day after he had interviewed for a job with the firm.
Niemie has said he had already resigned his role with NYSNA when he met with White Oak and that he was not involved in White Oak being retained. Niemie joined White Oak in June 2016 and worked for them until October 2019, according to his LinkedIn profile.
Korn Ferry managed the search that brought Niemie aboard.
PFRSNJ was formed in 2018 when legislators transferred investment management decisions from the State Investment Council to the board of trustees for the Police and Firemen’s Retirement System. It provides retirement benefits to approximately 40,000 retirees and accepts contributions from approximately 40,000 active members.
The other state public pension fund actively searching for a CIO is the Pennsylvania Public School Employees’ Retirement System (PSERS).
Robert J. Devine, the system’s fixed income managing director, has been serving as interim CIO since December when James H. Grossman Jr. transitioned to a senior advisor role. Grossman retired in May.
Grossman and then-Executive Director Glen R. Grell moved to retire in November after an investment calculation error led to the federal investigation. PSERS in August said the Justice Department closed the probe and would not be bringing criminal or civil charges against the system.
PSERS began its search for a new CIO in August as well, overseen by Hudepohl & AssociatesA PSERS spokesperson did not immediately return a message on the search’s status. The 15-person PSERS board will make the final selection. The CIO oversees a team of 70.
Like ERS, PSERS too had a positive return for the fiscal year ended June 30. The $75.9 billion system said it produced a return of 2.28%. As of June 30, 2021, PSERS had an unfunded liability of $44 billion and a funded ratio of 59.6%. The system has put in place a plan aimed at bringing it to full funding. It is projected to reach 76% by 2029.