New York City may bring its pension management in-house:
New York City’s $140 billion retirement system pays Wall Street money managers about $360 million a year, the only one of the 11 biggest U.S. public-worker pensions that refuses to manage any assets internally. Larry Schloss, the city’s chief investment officer, says the practice must end.
Schloss, 58, points to Ontario’s C$130 billion ($126 billion) teachers’ pension fund, which has returned an average 9.6 percent annually on its investments since 2003 — 1.6 percentage points better than New York’s funds. The Canadian system reaped those gains mostly without paying outside asset managers. Schloss says the same in-house approach could work in New York.
…
The 38 staff members in the city comptroller’s Bureau of Asset Management oversee five funds for police, firefighters, teachers, school administrators and civil-service workers. They get paid an average of $100,000 a year, less than the median base salary of a first-year Harvard MBA graduate. They farm out asset management to more than 300 firms.
In-house management is definitely the way to go for funds that have the size to justify it – and NYC’s $140-billion meets that criteria! It isn’t a panacea, though – you do have to be careful that you hire actual asset managers, not salesmen. And of course, having hired actual asset managers, being unafraid to fire them.
DBRS confirmed Valener Inc, proud issuer of VNR.PR.A, at Pfd-2(low):
DBRS has today confirmed Valener Inc.’s (Valener or the Company) Cumulative Rate Reset Preferred Shares, Series A rating at Pfd-2 (low), with a Stable trend. The rating is based on the credit quality of Valener’s 29%-owned Gaz Métro Limited Partnership (GMLP), which guarantees the First Mortgage Bonds and Senior Secured Notes (rated “A”) of Gaz Métro inc. (GMi), and Valener’s low non-consolidated leverage. GMi owns the remaining 71% of GMLP.
Approximately 70% of GMLP’s EBITDA is from its relatively stable regulated natural gas distribution business in Québec, which operates under a supportive regulatory regime. GMLP also benefits from cash flow diversification from its investments in regulated energy distribution businesses in Vermont and the pipeline business (see the rating report on Gaz Métro inc. dated May 31, 2013). Distributions from GMLP have sufficiently covered Valener’s preferred dividends and interest and operating expenses. Valener’s rating is one notch lower than the rating of GMi, reflecting its structural subordination to GMLP.
The Canadian preferred share market slid into month end, with PerpetualPremiums down 14bp, FixedResets losing 19bp and DeemedRetractibles off 11bp. Good volatility, comprised entirely of losers including, oddly enough, a large contingent from Canadian Utilities. Perhaps the CU.PR.G recent new issue has caused some indigestion? Volume was very high, with the highlights comprised almost entirely of FixedResets, the only exception being the CGI new issue.
And that’s it for another month!
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1431 % | 2,551.6 |
| FixedFloater | 4.01 % | 3.25 % | 40,510 | 18.59 | 1 | -2.2259 % | 4,102.3 |
| Floater | 2.73 % | 2.95 % | 78,022 | 19.79 | 4 | 0.1431 % | 2,755.1 |
| OpRet | 4.82 % | 1.03 % | 66,565 | 0.09 | 5 | 0.0388 % | 2,618.4 |
| SplitShare | 4.63 % | 4.07 % | 98,738 | 4.06 | 6 | 0.0072 % | 2,986.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0388 % | 2,394.3 |
| Perpetual-Premium | 5.21 % | 3.78 % | 96,637 | 0.74 | 32 | -0.1357 % | 2,371.5 |
| Perpetual-Discount | 4.90 % | 4.94 % | 190,726 | 15.48 | 4 | -0.0718 % | 2,654.0 |
| FixedReset | 4.90 % | 2.81 % | 248,609 | 3.50 | 81 | -0.1934 % | 2,511.7 |
| Deemed-Retractible | 4.91 % | 3.62 % | 141,201 | 1.52 | 44 | -0.1092 % | 2,453.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.G | FixedFloater | -2.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-05-31 Maturity Price : 22.86 Evaluated at bid price : 23.72 Bid-YTW : 3.25 % |
| FTS.PR.H | FixedReset | -1.57 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-05-31 Maturity Price : 23.62 Evaluated at bid price : 25.10 Bid-YTW : 2.76 % |
| CU.PR.C | FixedReset | -1.28 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 26.22 Bid-YTW : 2.72 % |
| CU.PR.D | Perpetual-Premium | -1.07 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-09-01 Maturity Price : 25.00 Evaluated at bid price : 25.97 Bid-YTW : 4.36 % |
| CU.PR.F | Perpetual-Premium | -1.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-05-31 Maturity Price : 24.32 Evaluated at bid price : 24.70 Bid-YTW : 4.55 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BNS.PR.Q | FixedReset | 65,390 | Nesbitt crossed blocks of 25,000 and 10,000, both at 25.24. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.25 Bid-YTW : 2.99 % |
| SLF.PR.H | FixedReset | 64,815 | TD crossed 30,000 at 25.90. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.81 Bid-YTW : 2.79 % |
| RY.PR.P | FixedReset | 60,996 | RBC crossed 50,000 at 25.70. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 25.68 Bid-YTW : 2.65 % |
| CGI.PR.D | SplitShare | 55,900 | Recent new issue. YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2023-06-14 Maturity Price : 25.00 Evaluated at bid price : 25.18 Bid-YTW : 3.68 % |
| TRP.PR.C | FixedReset | 53,939 | Desjardins crossed 50,000 at 25.65. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-05-31 Maturity Price : 23.63 Evaluated at bid price : 25.60 Bid-YTW : 2.82 % |
| TD.PR.K | FixedReset | 53,575 | TD sold 10,000 to anonymous at 26.27, then crossed 10,000 at 26.28. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 26.28 Bid-YTW : 2.27 % |
| There were 60 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| FTS.PR.H | FixedReset | Quote: 25.10 – 25.50 Spot Rate : 0.4000 Average : 0.2622 YTW SCENARIO |
| CU.PR.D | Perpetual-Premium | Quote: 25.97 – 26.27 Spot Rate : 0.3000 Average : 0.1995 YTW SCENARIO |
| CU.PR.F | Perpetual-Premium | Quote: 24.70 – 24.97 Spot Rate : 0.2700 Average : 0.1695 YTW SCENARIO |
| BMO.PR.P | FixedReset | Quote: 26.40 – 26.58 Spot Rate : 0.1800 Average : 0.1176 YTW SCENARIO |
| MFC.PR.H | FixedReset | Quote: 26.57 – 26.79 Spot Rate : 0.2200 Average : 0.1612 YTW SCENARIO |
| BNS.PR.Y | FixedReset | Quote: 24.75 – 24.90 Spot Rate : 0.1500 Average : 0.0955 YTW SCENARIO |