Missouri Pension Fund Awarded $123 Million in State Street Suit

The Public School Retirement System of Missouri (PSRS) has accepted a $123 million out-of-court settlement with State Street Bank & Trust Company, which the pension had accused of violating its fiduciary and contractual obligations.

According to court documents, State Street agreed to manage and invest some of the assets of PSRS, and the Public Education Employee Retirement System of Missouri (PEERS). However, both retirement systems alleged that State Street violated multiple statutory and common-law duties while managing the systems’ assets.

The dispute dates back to 2008, when the board of trustees of the Missouri retirement systems began withdrawing funds from a State Street investment vehicle called the Quality D Fund, in which PSRS and PEERS had invested more than $7 billion.

Between October 2008 and May 2009, the board withdrew most of the retirement systems’ assets from the Quality D Fund. However, State Street claimed the withdrawal was wrongful, and in September 2009, ordered the board to transfer much of the withdrawn funds back into the Quality D Fund.

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But the board refused to make the transfer, claiming that doing so would have resulted in a $125 million loss to the retirement systems. In response, State Street devalued the retirement systems’ remaining interest in the Quality D Fund, which the board said resulted in a loss of approximately $96 million to the retirement systems.

PSRS and PEERS terminated their custodial relationship with State Street in October 2010, and dropped its lawsuit on receipt of the $123 million payment.

Tags: Lawsuits, Missouri, Pension, State Street

Hywin Capital Management, based in Shanghai, has launched a new, multi-manager hedge fund that is targeting 8% to 15% annual returns with minimal drawdowns, according to Gib Dunham, managing director and the portfolio manager of the fund.

The quantitative fund will allocate assets to four primary sectors, including relative value, private credit, quantitative, and zero correlation, Dunham said.

He added that the focus of the fund is to combine managers with the proven ability to generate excess returns over benchmark indices, manage drawdowns, and provide returns that are uncorrelated with the broad industry benchmarks.

Zhu Shuming, president of Hywin Capital, said China’s hedge fund industry is still growing and not many Chinese investors are familiar with alternative investment strategies.

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“Probably more than 90% of Chinese investors’ portfolios are in real estate. In fact, we bring the concept of investment portfolio to our investors to diversify risks and gain returns,” said Zhu.

The first hedge funds in China were recognized legally in 2013. Since then, expansion has been slow due to China’s nascent financial services infrastructure. Still, the Asset Management Association of China said there are more than 27,000 hedge funds registered in China as of 4Q 2016.

Zhu said Hywin Financial Holding Group, Hywin Capital’s parent company, has established multiple overseas offices to introduce a variety of investment vehicles to wealthy Chinese investors and help diversify their portfolios.

“The launch of this multi-manager product is significant to our Chinese investors because it’s an asset class most of them don’t have access to,” said Dunham.

Hywin Financial Holding Group is a multi-national conglomerate with more than 5,000 employees worldwide and approximately $15 billion in assets under management.

Founded in 1989, the company has expertise across multiple asset classes, including hedge funds, real estate, insurance, asset management, private equity, and lending.

Tags: China, Chinese, Hedge Fund, Hywin, Zhu Shuming

Missouri Pension Fund Awarded $123 Million in State Street Suit

Chinese Hedge Fund Opens in US