State Employees’ Retirement Fund Market Value Altimeter
June 2006
| Valuation Date |
Market Value (in billions) |
| 5/31/06 | $10.447 |
| 4/30/06 | $10.685 |
| 3/31/06 | $10.590 |
| 2/28/06 | $10.493 |
| 1/31/06 | $10.457 |
| 12/31/05 | $10.273 |
| 12/31/04 | $9.785 |
| 12/31/03 | $9.369 |
| 12/31/02 | $8.573 |
| 12/31/01 | $9.914 |
| 12/31/00 | $10.890 |
| 12/31/99 | $11.055 |
| 12/31/98 | $10.020 |
| 12/31/97 | $8.922 |
| 12/31/96 | $7.654 |
| 12/31/94 | $5.385 |
| 12/31/90 | 3.9935 |
The market value of the State Employee Retirement Fund had a break in its seven month consecutive increase. A 238 million decrease developed between April 30 and May 31, 2006 leaving a balance of 10.447 billion. A return to a higher figure in the next thirty days is anticipated.
A pension fund review delivered January 29, 2006 to the State Retirement Board by Jacqueline M. Johnson, CFK, Director, Bureau of Investments included the Bureau’s Mission Statement, its goals, objectives and results of the Bureau efforts. There was a decrease of 876 members under the defined benefit program that stopped adding members in July 1997. As of September 30, 2005 the plan showed 86,771 members including retirees, beneficiaries, current employees vested, current employees not vested and inactive employees entitled to, but not yet receiving benefits. Only after the last beneficiary has been deceased will the plan be terminated. This may take over 80 years. The report also showed a funded ratio Based on Actual Value as of September 30, 2005 as 79.8%. This appears a controllable percent. The economic environment, however, appears to be a conundrum as oil was selling at 75 dollars a barrel as of July 6, 2006 and the housing market indicated a market slowdown. However, at this time, corporate earnings and balance sheets remain strong. A diversification of assets by the fund indicates a proper program to pursue.
The reporting of those individuals responsible for the investment activities of an asset class continues and this month we are featuring Mr. Timothy J. Recker, CFA, Administrator of the Alternative Investments of the Bureau of Investments. Mr. Recker was appointed Administrator in March 2003 and is responsible for management of the private equity, hedge funds, and structured products for the State of Michigan Retirement Systems.
Prior to joining the Bureau, Mr. Recker was managing an insurance portfolio for GE Asset Management focused on a multitude of asset classes. He joined GE in 1995 and completed GE’s Financial Management Program in 1997. He also worked in Hong Kong for three years — focusing on mergers and acquisitions, foreign currency hedging, and business liquidation.
Mr. Recker graduated from Bellarmine College with a bachelor’s degree in Business Administration and Economics in 1995. He earned his MBA from the University of North Carolina Chapel Hill in 2001. Mr. Recker is also a CFA charter holder and a member of the CFA Institute.
Observations, Facts and Assumptions
The headline read “These are confusing times.” The article subsequently reported that inflation was back as consumer prices had risen 4.2% over the past 12 months and at a 5.5% annual rate in May. The article continued that the economy is slowing and there is a question whether price increases slow, too. The hope for rescue comes from the new Federal Reserve Chairman Mr. Bernanke, who, after some initial confusion is getting tough on inflation as he continues to increase rates. The rate now stands at 5.25% and may reach 6% in the foreseeable future. Apparently Mr. Bernanke is attempting to become a defender of stable prices. We appreciate his foresight, determination, and tenacity. We hope he is right.
One news of the day is about CEO’s pay. Many voters are outraged. Big and small investors are demanding change. It appears many CEOs are being paid for the for the wrong thing. Example — the median pay for the S&P 500, CEOs hit 8.4 million in 2005 — shareholder returns over the same period were close to zero according to Equilar, a California compensation research firm. Boards that worry about matching the competition in baseball, basketball, football, and other sports are similar in nature and can end up rewarding failure. Twenty-five years ago the medium compensation for execs was thirty-three times the average worker’s pay. In 2000, stock options and rewards soared to more than 785 times the average worker’s pay. Mr. Lee Raymond retired from Exxon as Chief with 405 million. Now you know why gas is three dollars a gallon. Mr. Raymond thanks everyone who contributed.
Exxon recently captured the number one spot on the Fortune 500 replacing the recent champion Wal-Mart in 2005. Its revenue last year was 339.9 billion and more profit than any U.S. company in history. Gee, do you suppose the people under the dome in Washington are aware of this travesty? Maybe they are part of the problem. Maybe!
Did You Know
- The first human to culturally occupy Michigan were the Ottawa, Chippewa, Huron, and Potowatomi Indians. The Ottawas were reported living in forests in along lakes as early as 1715.
- The largest large mouth bass on record was a 22.4 pounder caught in 1933.
- The number of bird species recorded in the continental U.S. and Canada is over 900.
- The nest of a bald eagle can be 12 ft. deep, 10 ft. wide and weigh over a ton.
- Moles are able to tunnel through 300 ft. of each a day.
Ponder This
- During an election campaign, the air is full of speeches and vice versa. — Henry Adams.
- I know when people see a cat’s litter box they always say, “Oh, have you got a cat?” Just once I want to say “No, it’s for company.”
- A fine is a tax for doing wrong. A tax is a fine for doing well.
- Why isn’t a phonetic spelling spelled the way it sounds?
- Two Eskimos sitting in a kayak were chilly but when they lit a fire in the craft it sank. Proving once again that you can’t have you kayak and heat it, too.
Editor’s note: Al Trierweiter is a former President of the Lansing SERA Chapter, former Chairman of the Michigan SERA Coordinating Council, former Legislative Representative for both the Lansing Chapter and the SERA Council. AI may be reached at 6440 Old River Trail, Lansing 48917; phone 321-0041.
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