Philly pension CIO out: UPDATE
Hamda, who shook up allocations, leaving for unnamed financial institution
Sumit Handa, hired as chief investment officer of the underfunded $5 billion Philadelphia city workers' retirement plan in 2011 with a mandate to boost investment returns, is leaving for an as-yet undisclosed CIO job at a financial institution, reports Asset International's Chief Investment Officer website here, citing city pension board executive director Fran Bielli.
In Philadelphia, the manager of the pension fund is paid about the same as a city prosecutor, a fraction of what a person with similar responsibilities can make working for a private investment company. Handa's departure meant the liquidation of the system's $250 million Independence Fund, which Handa had managed himself.
Under Hamda, the city
» READ MORE: fired some investment management firms
, hired others (including billionaire
» READ MORE: Sixers owner Josh Harris' Apollo Global
), and sought to manage more funds directly at lower cost than hring outside managers. The system reported gaining
» READ MORE: 15.6%
in fiscal 2014, including almost 12% for the internally-managed fund, which trailed the fast-rising U.S. stock market but beat the fund's performance in past years.
The city had not started planning for Hamda's departure or replacement when he resigned, according to CIO. . .
City finance chief Rob DuBow said the money Hamda used tomanage directly has been put into low-risk bonds and Treasury notes for now. He said Handa's investments performed "well" and there are no plans at this time to change the way other city funds have been invested with private managers. He declined to measure Philadelphia's performance under Handa against state or suburban funds, noting it beat its own benchmark return of nearly 8 percent last year.
The city's past failure to fully fund its pension system has ensured that annual payments to that system now eat up about one-sixth of the city's annual budget, under the Nutter administration's policy of not letting the pension deficit get worse.