Alabama’s $36.7 billion employee pension fund’s non-traditional investments now include one of the largest local US newspaper chains.
The Retirement Systems of Alabama recently acquired CNHI LLC from Raycom Media, which the plan owned. Raycom has been bought by Atlanta-based Gray Television. Gray TV is spinning off the news outlet, which contains 68 daily newspapers and more than 40 non-dailies and websites in more than 20 states, to the fund.
The state retirement system also has been a creditor of the news organization, according to the Associated Press. Donna Barrett, CNHI’s chief executive, said the move will provide stability for the company.
Financial details were not disclosed.
“We have been an investor in CNHI for decades, and it later merged with Raycom Media,” an Alabama Retirement System spokesperson told CIO in an email. “As you can see from the press release today on Raycom Media, it was purchased by Gray TV. CNHI was not a part of that deal so we reacquired CNHI and are happy with the investment.”
The Alabama pension system’s other non-traditional investments include golf courses, airliners, and New York City’s largest office building. The state retirement system covers four pension plans, the Teachers Retirement System ($24.4 billion), the state and local Employees Retirement Systems (collectively $12 billion), and the Judicial Retirement Fund ($299 million).
The fund began adding non-traditional investments to its portfolio in the 1970s, when David Bronner became the then-badly underfunded system’s head. He was given creative freedom by his superiors to turn the organization around, so he began to take advantage of that to devise a strategy still used today.
“Alabama has tremendous beauty, tremendous assets, and tremendous people, yet it hangs out as the fifth-poorest state in the country, so something had to be done to change the dynamics,” he said in an interview with American Airlines’ worldwide flight magazine. “In a state like this, if you are going to keep the pension fund sound, you have to make the whole state financially better off. My philosophy was the stronger that I could make Alabama, the stronger the pension fund would be.”
According to the fund’s most recent Comprehensive Annual Financial Report (2017), the teacher’s system allocated 56.99% to domestic stock, 13.51% international stock, 10.41% domestic fixed income bonds, 9.85% real estate, 3.54% money market securities, 3.17% US government guaranteed income, 1.88% mortgage-backed securities, and 0.65% to US agency securities.
The employee system’s allocations were 58.50% domestic stock, 12.22% international stock, 10.39% domestic fixed income bonds, 9.69% real estate, 3.50% money market securities, 3.09% US government guaranteed income, 1.95% mortgage-backed securities, and 0.66% US agency securities.
Lastly, the judicial fund allocated 54.92% to domestic stock, 15.07% international stock, 9.28% domestic fixed income bonds, 8.07% US government guaranteed income, 5.51% money market securities, 4.40% mortgage-backed securities, 1.38% US agency securities, and 1.37% real estate.