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OPERS INVESTMENTS

Some OPERS members may wonder how their pension funds are invested and what impact, if any, they will face if the pension portfolio drops in value. Click the following links to review the most current Statement of Investment Policy.  In it you will find information about the investment philosophy, investment structure, and adviser guidelines. 

Statement of Investment Policy 

OPERS & URSJJ (April 2017) 
Pathfinder Defined Contribution Plan (July 2016)
SoonerSave Defined Contribution Plan (July 2016)


Here are answers to some frequently asked questions about investments.

1. Q. How big is the OPERS investment portfolio?

A. As of December 31, 2016, OPERS had $8.7 billion in total assets and URSJJ had $302 million in total assets.

2. Q. What is the portfolio invested in?

A. Broadly speaking the OPERS portfolio is invested in three major asset classes which are U.S. stocks, international stocks and domestic bonds. Each asset class is very broadly diversified. For example, OPERS’ stock portfolio alone has a stake in over 2,800 companies. The current strategic target allocation calls for 44% U.S. stocks, 24% international stocks, and 32% domestic bonds.

3. Q. How do you determine the amount to invest in each asset class and who makes that decision?

A. The portion of the portfolio allocated to each asset class is the most important decision an investor can make and it has the greatest impact on long-term investment results. The System’s portfolio asset allocation is decided after intensive analysis and study. The goal is to produce the highest level of investment return at a given level of expected risk. This decision can only be made by the OPERS Board of Trustees. The investment consultant and the OPERS staff prepare the analysis to assist the Board in this decision. The asset allocation is reviewed periodically - about once every three years.

4. Q. Who decides which securities to buy and sell?

A. The OPERS Board hires and retains professional investment management firms to manage assets for the System. Each firm is allotted a portion of the total portfolio to manage. The portfolio manager(s) at each firm decides which securities to buy, sell or hold for the portfolio managed for OPERS.

5.  Q. How are Investment Management firms selected?

A. The OPERS Board is responsible for both hiring and terminating the investment management firms that work for the System. They are assisted in this process by OPERS staff and an investment consulting firm. The goal is to find the firm(s) that has particular expertise in managing the type of portfolio to be assigned. The OPERS staff and the investment consultant prepare requests for proposal (RFP’s) according to the specifications approved by the Board. The RFP’s are posted on the OPERS website in an open bidding process. Minimum criteria in the RFP assist interested investment managers in determining whether they are a possible match for System’s requirements. OPERS staff and the investment consultant review the submitted proposals and compile an analysis for the Board based upon responses received. The Board reviews the analysis of the responses and typically selects the top finalist firms to participate in an interview before the Board. Normally after hearing presentations from the finalist firms, the Board makes their selection.

6.  Q. When an investment management firm is selected, can the firm buy any type of investment with the System’s money?

A. No. Each investment management firm may only invest according to the specific guidelines established by the Board for the portfolio assignment the firm has been given. As a simple example, if the firm is hired to manage a portfolio of U.S. equities the firm won’t be allowed to fill the portfolio with bonds.

7.  Q. How is the investment consultant hired and what is the consultant’s role?

A. The investment consultant is hired by the Board following a competitive bidding RFP process similar to that described above. The investment consultant prepares periodic and special analysis reports with guidance and assistance from OPERS staff for the Board regarding all aspects of the investment program. Monitoring investment performance, investment manager searches and asset allocation studies are all part of the normal duties of a consultant.

8.  Q. How is my retirement benefit affected if the investment portfolio declines in value?

A. The market value of the OPERS investment portfolio has no direct impact on a member’s retirement benefit. The member’s benefit is determined by years of service and final average pay. Changes in the market value of the OPERS investment portfolio are not in any way part of the formula used to determine benefits due.

9.  Q. Is the investment structure and process used by OPERS unusual or is it fairly typical?

A. The investment program structure and process is very typical among medium sized public pension funds across the country. Most similar sized funds retain institutional investment management firms to manage some if not all of their investment portfolios and the most of them use the services of an investment consulting firm.

Below is a list of OPERS’ and URSJJ investment managers.

 

 

OPERS Balance & Asset Allocation
as of December 31, 2016

Manager
$ Mkt Value (000s)
Northern Trust Company
Cash Account
27,102
Grand Centre
Commercial Real Estate
12,875
BlackRock Financial Management
Enhanced Fixed Income
1,358,644
Hoisington Investment Management
Interest Rate Anticipation
254,942
TIPS
Interest Rate Anticipation
244,952
Metropolitan West Asset Mgmt
Active Fixed Income
783,593
Domestic Fixed Income
2,642,130
Mondrian Investment Partners
International Equity-Value
510,833
Baillie Gifford
International Equity- Growth
268,303
BlackRock
ACWI xUS Growth
270,329
BlackRock
ACWI xUS
873,050
International
1,922,515
BlackRock
Russell 1000 Index
1,800,855
BlackRock
Russell 1000 Growth Index
246,429
Mellon Cap Mgmt
Enhanced US Equity
558,093
State Street Global Advisors
Enhanced US Equity
561,579
Aronson Johnson Ortiz
Large Cap Value
257,963
UBS Global Asset Mgmt
Small Cap Growth
204,414
Barrow Hanley Mewhinney
Small Cap Value
205,734
DePrince, Race & Zollo
Small Cap Value
211,011
US Equity
4,046,079

Total Fund 
8,650,700

 

URSJJ Balance & Asset Allocation
as of December 31, 2016

Manager
$ Mkt Value (000s)
Northern Trust Company
Cash Account
1,521
BlackRock Financial Management
Enhanced Fixed Income
47,613
Hoisington Investment Management
Interest Rate Anticipation
9,700
TIPS
Interest Rate Anticipation
8,856
Metropolitan West Asset Mgmt
Active Fixed Income
27,374
Domestic Fixed Income
93,543
BlackRock
ACWI x-US
66,949
BlackRock
Russell 2000 Index
118,542
BlackRock
Russell 1000 Index
21,495
US Equity
140,037
Total Fund
302,050

  

Last Revised - April 20, 2017

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