Wall Street Journal ran an interesting profile on Wednesday of Steve Edmundson, the CIO of the Nevada Public Employees’ Retirement System.
The System’s investment approach is notable because its very passive; its investment-related expenses rank as just about the lowest in the country, and much of its portfolio is invested in instruments tracking indexes.
Under Edmundson, the System’s returns have been stronger than powerhouses like CalPERS.
Even the office is bare-bones, according to the Wall Street Journal:
His strategy is to keep costs low and not try beating markets, he says. “We’re bare bones.”
On his bare-bones desk is an inbox, a stapler and a tin cup of paper clips and business cards. A desk behind his swivel chair sports his printer and family photos. He has no dedicated Bloomberg terminal and doesn’t watch CNBC.
He brings lunch in Tupperware. “Great days,” he says, are when his wife makes lunch—a BLT or tuna-fish sandwich. Otherwise, it is leftover fish or salads. “I don’t want to spend $10 a day for lunch.”
From his one-story office building in Carson City, Mr. Edmundson commands funds whose returns over one-year, three-year, five-year and 10-year periods ending June 30 bested the nation’s largest public pension, the California Public Employees’ Retirement System, or Calpers, and deeply-staffed plans of many other states.
When Mr. Edmundson joined the Nevada plan in 2005 as an analyst, roughly 60% of its stocks were in indexes. He turned it even more passive after becoming chief investment officer in 2012. He fired 10 external managers, and, by 2015, all of its stock and bondholdings were in passively managed funds.
Its outside-management bill is about one-seventh the average public pension’s, according to Nevada plan documents and Callan Associates, which tracks retirement-plan expenses.
If Nevada consumed a typical Wall Street diet, it would pay roughly $120 million in annual fees. In 2016, Nevada paid $18 million.
Read the whole thing here.