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Manager Selection

Detroit Pension Fund Seeks Deputy CIO

The Retirement System of the City of Detroit is looking for an investment officer to support CIO Ryan Bigelow.
By Michael Katz


The Retirement System of the City of Detroit is looking to hire a deputy chief investment officer, according to a job posting on the pension fund’s website.

The RSCD is comprised of two separate retirement systems: the General Retirement System and the Police and Fire Retirement System, each of which is managed by their respective board of trustees.  Each retirement system also has two distinct plans: a legacy traditional defined benefit plan and a new hybrid defined benefit plan. 

The plan, while still underfunded, is on improved footing in the wake of its 2013-14 bankruptcy, which suspended the city’s contribution requirements. And the city itself is in better shape, with both Moody’s Investors Services and Standard & Poor’s this month giving it credit upgrades, to just two notches below investment grade. The ratings now are Ba2 and BB, respectively.

The deputy CIO will be responsible for managing and evaluating the fixed income and alternative investment programs in accordance with the RSCD’s investment policy statement, as well as applicable federal and state laws and regulations. The deputy CIO is also responsible for monitoring and due diligence of the equity and real estate portfolios, and providing advice and recommendations regarding all investments to the investment committee, executive director and board of trustees.

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The main responsibilities will be to identify, review and evaluate prospective investment opportunities, as well as coordinate portfolio review and due diligence meetings, and prepare agendas and meeting notes. The deputy CIO will also be expected to monitor and manage the portfolio of existing real estate investments to ensure compliance with limited partnership agreements and other contracts. The deputy CIO will also support CIO Ryan Bigelow with respect to ongoing due diligence of the private equity hedge fund portfolios.

Additional duties include, among others:

  • Developing internal and external reports on investment strategy and portfolio performance.
  • Assisting senior management with the use of risk analysis and compliance projects.
  • Performing quantitative and qualitative due diligence on prospective investment opportunities, including evaluating past track records.
  • Monitoring and regularly reporting on investment activities of investment partners.
  • Developing framework for analyzing the performance of existing investments.
  • Overseeing the quarterly and annual valuation process for all real assets.
  • Overseeing the development of an internal database of existing investments.

The knowledge, skills and abilities required include property, asset and portfolio management practices and procedures; real estate finance and investment methods and concept; real estate valuation methods, internal rate of return, net present value capitalization techniques; financial forecasting; sensitivity analysis; hold/sell and rent growth analysis and auditing principles and techniques.

The position also requires a minimum of 10 years’ experience performing a variety of professional investment duties related to acquiring, organizing, directing, underwriting and managing portfolios of institutional investment real estate. Experience with institutional private equity and hedge fund investments is preferred. Candidates can apply for the role at jobs@rscd.org.

RCSD provides services and benefits to approximately 9,000 active members and 20,000 retirees and beneficiaries, and has approximately $5 billion in assets.

In January of 2020, the board of trustees of the Police and Fire Retirement System sued its own investment committee to prevent a 75% pay increase to the retirement system’s former Deputy CIO Kevin Kenneally.

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Home > News > Asset Allocation > JPM: De-Risking Plans Suffer if They Don’t Broaden Out to Alts
Asset Allocation

JPM: De-Risking Plans Suffer if They Don’t Broaden Out to Alts

The old LDI method of sliding into bonds from stocks is past its prime, a study from the firm says.
By Larry Light

CIO-032122-JPM De-Risking Plans Suffer If They Don’t Broaden Out to Alts-1339294539
The theory of asset allocation was perhaps first summed up in Mark Twain’s novel “Pudd’nhead Wilson”: “Put all your eggs in one basket and—watch that basket.” But diversification in too many pension portfolios nowadays is askew, and at a time when lots of corporate defined benefit plans are reaching fully funded status.

That’s the conclusion of a study from J.P.Morgan Asset Management, which criticizes the de-risking strategies that numerous company plans have stayed with after suffering major losses in the 2008-09 financial crisis—when they should have re-tooled their approaches. The emphasis since the crisis— liability-driven investment, or LDI—is basically to shift more into fixed income and out of riskier, more volatile equities.

JPM’s answer: Move away from mainly stocks and bonds, and add more alternatives. That will bring better investment terms without taking on too much risk, the study argues.

Focusing “exclusively on risk reduction” is no longer necessary or desirable,  Jared Gross, head of JPM’s institutional portfolio strategy, said in an interview.

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The aggregate pension funded status of corporate plans was an estimated 96% as of the end of 2021, up from 88% in 2020, according to Willis Towers Watson. What’s more, Gross noted, plan regulatory strictures have been relaxed. So, for instance, a temporary decrease in funded status no longer requires a sponsor to raise its contribution, he observed.

The de-risking progression, though, now has reached a point of diminishing value, the JPM study contended. It “robs plans of the returns they need to remain fully funded and stable across time,” the report read. In short, returns suffer. “That’s inefficient,” said Gross, whose firm would be happy to assist clients to adopt this new arrangement.

The report advocates peppering in the likes of real estate, emerging market debt, private credit, and hedge funds into portfolios. “Liquid and illiquid assets should be balanced to ensure that access to capital is maintained but opportunities to generate uncorrelated returns are captured effectively,” the study declares.

To Charles Van Vleet, Textron’s assistant treasurer and CIO, the new JPM framework makes sense, and he is a fan of alts. “Plans on an LDI path generally become less and less diversified,” he said after looking over JPM’s report. Plans are “commonly reduced to investment-grade corporate bonds and a splash of growth assets: 10% to 15% of public or private equity.”

Better, he went on, are such alts as long-duration collateralized mortgage obligations and levered first lien loans. The Textron plan is 111% funded, with a 7.25% expected return on assets.

Corporate plans have just 19% in alternatives, per a 2021 Milliman study. The rest was split between bonds (50%) and stocks (31%), with bonds up slightly from the previous few years, thanks to LDI.

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