West Virginia Police & Fire Pension Trustees - - PowerPoint PPT Presentation

• Presentation for

West Virginia Police & Fire Pension Trustees

• “Fiduciary liability is not determined by investment

performance, but rather…by whether prudent investment practices were followed.”

Source: Prudent Investment Practices, A Handbook for Investment Fiduciaries by the Foundation for Fiduciary Studies, edited by the American Institute of Certified Public Accountants.

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• Traditional Asset Classes

Examples:

• Cash
• Bonds
• Domestic Stocks
• International Stocks

Alternative Strategies

Examples:

• Hedge Funds
• Private Equity
• Managed Futures
• Structured Credit

Liquid markets Historical performance data generally available Standardized benchmarks Returns primarily driven by beta Normal return distributions Potential illiquidity Limited and/or noisy performance data Absolute return objectives Alpha driven Non-normal return distributions Potential illiquidity Limited and/or noisy performance data Absolute return objectives Alpha driven Non-normal return distributions

Unlike other pension plans, Municipal Pensions of Police and Fire are limited to investing in traditional asset classes only.

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Past performance does not guarantee future results Indices are unmanaged and investors cannot invest directly in an index. The performance of unmanaged indices reflect no deductions for fees, expenses or taxes which would affect performance of actively managed assets

Return (%) 1950’s 1990’s 1980’s 12/1939 to 12/2011* 1960’s 1940’s 1970’s Last 5 Years RISK (% Standard Deviation) 2000’s

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S&P 500 Index Ibbotson Long Govt 90 Day T-Bills CPI

Note: All returns are annualized for the period ending 12/31/2011. Past performance does not guarantee future results. Generally, investing in equities entails greater volatility than investing in bonds. Indices are unmanaged and investors cannot invest directly in an index. The performance of unmanaged indices reflects no deductions for fees, expenses or taxes which would affect performance of actively managed assets

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Return % Risk

Past performance is no guarantee of future results. Diversification does not ensure against market loss.

100% Bonds 100% Stocks 60% Stocks/40% Bonds 70% Stocks/30% Bonds 40% Stocks/60% Bonds

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