City of Philadelphia Successfully Reallocates $295 Million in Pension Fund with Russell-Managed Portfolio Transition.Business Editors TACOMA, Wash.--(BUSINESS WIRE)--Oct. 14, 2002 The City of Philadelphia Board of Pensions and Retirement recently hired Frank Russell Frank Russell may refer to the following people:
The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. shift within the city's pension plan. Russell delivered a performance result that saved $2.9 million versus the plan's expectation. This success was accomplished through Russell's risk management solution that eliminated the potential for a negative performance surprise associated with their portfolio transition. "We selected Russell because we felt their philosophy and process were best suited for a transition of this complexity," said Chris McDonough, Investment Officer, City of Philadelphia Board of Pensions and Retirement. "Our main goal was to preserve capital, and we felt they were best suited to do that." The board rebalanced its asset allocation by transitioning assets from five fixed income managers to a passive midcap mid·cap adj. 1. Or or relating to corporations whose retained earnings and outstanding shares of common stock have a value between those of small cap companies and large cap corporations. 2. equity structure managed by Deutsche Asset Management. This shift of fixed income assets to equity kept the $4 billion pension plan's asset allocation in line with the board's investment strategy. "Implementing a risk-controlled strategy for the City of Philadelphia preserved investment performance relative to their benchmark during the period," said Travis Bagley, a portfolio transition manager for Russell, who led a dedicated transition team during the event. "Mismanagement mis·man·age tr.v. mis·man·aged, mis·man·ag·ing, mis·man·ag·es To manage badly or carelessly. mis·man  age·ment n. of this event during a period of high market volatility would have resulted in a large loss relative the benchmark." Russell estimated that the transition should have resulted in a performance loss of approximately 30.2 basis points as a result of transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). associated with this shift of assets. The Russell process produced a result that was 9.7 basis points better than expected. McDonough added that the ongoing communication during the event was impressive. "We received daily updates from Russell that assured us that this complex event was under control," he said. Bagley added that careful coordination between several institutions, along with the implementation of Russell's unique transition strategy, resulted in a successful transition. The board was able to achieve its target asset allocation within four days of receiving the certified See certification. assets, and four days later it was able to complete the new subscription to the index fund. "We used advanced risk-optimization methods to control portfolio structure and preserve performance relative to the benchmark throughout the event," said Bagley. "We designed an efficient strategy and then rigorously managed risk to achieve strong performance results." Frank Russell Securities is a broker-dealer subsidiary of Frank Russell Company. Through its transition management service in 2001, Russell completed a total of 235 transition events--more than doubling assets transitioned in 2000. Transition management is one of several services Russell offers to institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. . Other services include commission recapture recapture n. in income tax, the requirement that the taxpayer pay the amount of tax savings from past years due to accelerated depreciation or deferred capital gains upon sale of property. (See: income tax) RECAPTURE, war. , implementation management, long-term investment management, asset allocation advice, employee education, custody, performance reporting, recordkeeping and trusteeship. The City of Philadelphia's Board of Pensions and Retirements, which manages $4 billion for employees and retirees, ensures that retirement benefits promised to the active and retired members of the city's pension system are provided in a timely and professional manner. The nine-member Board is chaired by the director of finance and includes the city solicitor, the managing director, the city personnel director, the city controller, and four employees elected by the members of the four municipal unions. Frank Russell Company, a global leader in multi-manager investment Multi-manager investment is an investment product that consists of multiple specialized funds. Each specialized fund may invest across different sectors and markets, or having managers investing in the same asset class but have different investment styles. services, provides investment products and services in more than 35 countries. Russell manages $70 billion in assets and advises clients worldwide representing US$1.8 trillion. Founded in 1936, Russell is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Wash., with additional offices in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Toronto, London, Paris, Singapore, Sydney, Auckland and Tokyo. For more information, go to www.russell.com. Frank Russell Company, a Washington, USA corporation, operates through subsidiaries worldwide. Frank Russell Securities, Inc. is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Frank Russell Company and a member of the NASD NASD See: National Association of Securities Dealers NASD See National Association of Securities Dealers (NASD). . |
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