[WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
CABob
Posts: 4776
Joined: Sun Feb 25, 2007 8:55 pm
Location: Southern California

[WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing]

Post by CABob » Wed Oct 19, 2016 6:31 pm

[Thread merged into here, see below. --admin LadyGeek]

http://www.wsj.com/articles/what-does-n ... 1476887420
An interesting WSJ article about Steve Edmundson, the investment chief for the Nevada Public Employees’ Retirement System who is out-earning pension funds that have hundreds on staff.
Bob

carolinaman
Posts: 3889
Joined: Wed Dec 28, 2011 9:56 am
Location: North Carolina

Re: Boglehead in hiding?

Post by carolinaman » Thu Oct 20, 2016 6:52 am

Great article. Thanks for sharing. As a retiree in NC pension system, I would love to see them dump their hedge funds, private equity, consultants, etc and go this direction, but it will never happen.

User avatar
matjen
Posts: 2128
Joined: Sun Nov 20, 2011 11:30 pm

WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by matjen » Thu Oct 20, 2016 7:21 am

This may be the ultimate Boglehead article in the sense that it does not matter how large your portfolio is. Boglehead principles can/will still work. The pictures of this fellow in his drab office are the best. One guy from a below average school sitting at a generic desk eating leftovers can perform with the best of the best.

What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing
Nevada goes passive to beat peers; BLT or tuna


http://on.wsj.com/2emD4f3
Steve Edmundson has no co-workers, rarely takes meetings and often eats leftovers at his desk. With that dynamic workday, the investment chief for the Nevada Public Employees’ Retirement System is out-earning pension funds that have hundreds on staff.

His daily trading strategy: Do as little as possible, usually nothing.

Steve Edmundson
Steve Edmundson
The Nevada system’s stocks and bonds are all in low-cost funds that mimic indexes. Mr. Edmundson may make one change to the portfolio a year.
A man is rich in proportion to the number of things he can afford to let alone.

209south
Posts: 484
Joined: Mon Jan 28, 2013 10:58 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by 209south » Thu Oct 20, 2016 7:37 am

Very cool - any idea what Nevada's asset allocation is?

Jack FFR1846
Posts: 10494
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Jack FFR1846 » Thu Oct 20, 2016 7:41 am

Sounds like what I do with my portfolio. I wonder if he rebalances on his birthday too.
Bogle: Smart Beta is stupid

kaneohe
Posts: 5956
Joined: Mon Sep 22, 2008 12:38 pm

Re: Boglehead in hiding?

Post by kaneohe » Thu Oct 20, 2016 8:01 am


Engineer250
Posts: 1078
Joined: Wed Jun 22, 2016 1:41 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Engineer250 » Thu Oct 20, 2016 8:13 am

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.”
He generally doesn't work outside 8 a.m.-to-5 p.m. hours. He commutes in a 2005 Honda Element with over 175,000 miles on it. His 2015 salary was $127,121.75, according to a Nevada Policy Research Institute database.
This guy sounds like one of those "millionaire next door" types as well.
“Doing nothing is harder than it looks,” says Ken Lambert, Mr. Edmundson’s predecessor and only outside investment-strategy consultant. Harder, he says, because of the restraint needed to practice inaction.
Glad it's working for Nevada, and good and true advice for your typical Boglehead as well.

I was going to say I want this guy's job until I saw this...
It isn’t migrating all the way, says Vijoy Paul Chattergy, the Hawaii pension’s chief investment officer and a friend of Mr. Edmundson’s.

“If I could sit on the beach in Maui and phone it in every day, I’d do it,” says Mr. Chattergy, whose plan, which trails Nevada’s in returns, uses a variety of strategies. “But I don’t think that’s the way the world works. That’s why we have the approach we do.”
I disagree with Chattergy. IF I was Hawaii's pension chief investment officer I would employ Mr. Edmundson's strategy and then I would 'sit on the beach in Maui and phone it in every day" :sharebeer
Where the tides of fortune take us, no man can know.

209south
Posts: 484
Joined: Mon Jan 28, 2013 10:58 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by 209south » Thu Oct 20, 2016 9:06 am

I found this from a couple years ago https://www.nvpers.org/public/publications/FY14CAFR.pdf The 'Asset Mix' is on page 67.

Interesting choice of investment advisors...I guess when you have billions Vanguard doesn't work, or maybe the numbers are large enough that the advisors charge Vanguard like fees. I'm somewhat surprised by the amount allocated to equities, as I assumed pension funds would be more fixed income oriented to deal with their fixed obligations...is ~62% equities fairly typical for large pension funds?

lazydavid
Posts: 2592
Joined: Wed Apr 06, 2016 1:37 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by lazydavid » Thu Oct 20, 2016 9:15 am

209south wrote:Interesting choice of investment advisors...I guess when you have billions Vanguard doesn't work, or maybe the numbers are large enough that the advisors charge Vanguard like fees.
The cheapest way for most people to own the market is by buying an index fund. But at a certain level, it probably becomes cheaper to literally own the market--by directly holding all the individual components of your desired index.

He definitely is getting Vanguard-like fees. He actually might be doing better than Vanguard, considering the International exposure. According to the article, he's paying 0.05% for the overall portfolio ($18M/$35B).
Last edited by lazydavid on Thu Oct 20, 2016 9:25 am, edited 2 times in total.

User avatar
CyberBob
Posts: 3264
Joined: Tue Feb 20, 2007 2:53 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by CyberBob » Thu Oct 20, 2016 9:17 am

Interesting that the U.S. equities are in the S&P 500, so no small-caps.
And the international equities are in the EAFE, so no emerging markets.

Fclevz
Posts: 417
Joined: Fri Mar 30, 2007 11:28 am

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Fclevz » Thu Oct 20, 2016 9:19 am

It looks like he reduced international bonds at the end of 2013. So he does something on some days. :D

dabblingeconomist
Posts: 115
Joined: Wed Jul 13, 2016 8:42 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by dabblingeconomist » Thu Oct 20, 2016 9:32 am

209south wrote:I'm somewhat surprised by the amount allocated to equities, as I assumed pension funds would be more fixed income oriented to deal with their fixed obligations...is ~62% equities fairly typical for large pension funds?
For state and local pension plans, it's very typical. If you take the relevant federal reserve data and divide the "corporate equities" line by "total financial assets" minus "miscellaneous assets" (the latter mainly represents underfunding of pensions, plus some measurement error), you get 63%.

This is even a slight underestimate because it doesn't include the equities by states via mutual funds. Once that is thrown in, the average equity share is probably about 2/3!

Spirit Rider
Posts: 11923
Joined: Fri Mar 02, 2007 2:39 pm

Re: WkSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Spirit Rider » Thu Oct 20, 2016 10:15 am

Pension funds have long been in the 60:40 ballpark. Yes, the have current obligations. However, their longevity concerns are different than a single retiree. For their younger workers, this can be a rolling 50 - 70 years.

Brain
Posts: 54
Joined: Fri May 27, 2016 9:14 am

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Brain » Thu Oct 20, 2016 10:22 am

209south wrote:I found this from a couple years ago https://www.nvpers.org/public/publications/FY14CAFR.pdf The 'Asset Mix' is on page 67.

Interesting choice of investment advisors...I guess when you have billions Vanguard doesn't work, or maybe the numbers are large enough that the advisors charge Vanguard like fees. I'm somewhat surprised by the amount allocated to equities, as I assumed pension funds would be more fixed income oriented to deal with their fixed obligations...is ~62% equities fairly typical for large pension funds?
This fund, and other corporate/public funds, are not mortal. They don't have a lifespan, at least not one measured in the way we measure our lives. They have an even longer timespan to be concerned about; they need to keep up with inflation over decades/centuries.

Grt2bOutdoors
Posts: 21496
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Grt2bOutdoors » Thu Oct 20, 2016 10:29 am

209south wrote:Very cool - any idea what Nevada's asset allocation is?
https://www.nvpers.org/public/investmen ... stpers.jsp

More importantly, check out the IPS of the pension fund - seeking to generate an 8% annual return and 4.5% above inflation? I think the CIO needs a reality check. Might as well wave a magic wand - it isn't going to happen in the for-seeable future. He needs to read more.......
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

User avatar
Oicuryy
Posts: 1329
Joined: Thu Feb 22, 2007 10:29 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Oicuryy » Thu Oct 20, 2016 10:47 am

Nevada PERS is only 73% funded. If you don't save enough you won't have enough no matter how frugally you manage your investments.

Ron
Money is fungible | Abbreviations and Acronyms

Grt2bOutdoors
Posts: 21496
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Grt2bOutdoors » Thu Oct 20, 2016 11:21 am

Oicuryy wrote:Nevada PERS is only 73% funded. If you don't save enough you won't have enough no matter how frugally you manage your investments.

Ron
73% funded is sufficient to pay the current batch of retirees. The interesting thing that I believe folks fail to account for is the ability for the state and participants to solve the problem, they do not have to solve it today they do have some time and should markets cooperate in an unexpected manner, that 73% funding ratio could increase. Also, pension funds do not need to exist into perpetuity, they can be frozen, no where is it inscribed in stone that pensions are a right for generations to come. They can easily go the way of the dodo bird, they did in the private sector and if push came to shove, you'll see it happening in the public sector.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

User avatar
Bob B
Posts: 675
Joined: Mon Mar 05, 2007 12:52 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Bob B » Thu Oct 20, 2016 11:33 am

I wonder what Mr. Edmundson's salary is since he does nothing all day? How big of a staff does that take?
Regards, | Bob | Wiki

mpowered
Posts: 51
Joined: Wed Nov 05, 2014 10:15 am

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by mpowered » Thu Oct 20, 2016 11:34 am

Bob B wrote:I wonder what Mr. Edmundson's salary is since he does nothing all day? How big of a staff does that take?
It says it in the article. Salary is $127,121.75. He has no staff.

User avatar
bostondan
Posts: 590
Joined: Sun Aug 18, 2013 12:21 pm
Location: Boston, MA

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by bostondan » Thu Oct 20, 2016 11:34 am

Bob B wrote:I wonder what Mr. Edmundson's salary is since he does nothing all day? How big of a staff does that take?
Engineer250 wrote:His 2015 salary was $127,121.75, according to a Nevada Policy Research Institute database.
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel

Grt2bOutdoors
Posts: 21496
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Grt2bOutdoors » Thu Oct 20, 2016 11:35 am

mpowered wrote:
Bob B wrote:I wonder what Mr. Edmundson's salary is since he does nothing all day? How big of a staff does that take?
It says it in the article. Salary is $127,121.75. He has no staff.
$127K in Nevada is living a pretty good life. He's doing well for himself and interestingly enough his investment consultant is Callen Associates. The same firm that puts out the Callen chart.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

User avatar
Earl Lemongrab
Posts: 7270
Joined: Tue Jun 10, 2014 1:14 am

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by Earl Lemongrab » Thu Oct 20, 2016 11:53 am

lazydavid wrote:The cheapest way for most people to own the market is by buying an index fund. But at a certain level, it probably becomes cheaper to literally own the market--by directly holding all the individual components of your desired index.
I'm not sure about that. My 401(k) at the MegaCorp has billions in it. That offers SSgA index CITs at expense ratios as low as .01%.

Edit: the ER above is from the fund itself. The plan adds some to the ER for plan expenses.

Earl
Last edited by Earl Lemongrab on Thu Oct 20, 2016 12:09 pm, edited 1 time in total.

User avatar
LAlearning
Posts: 1365
Joined: Wed May 09, 2012 12:26 pm
Location: Los Angeles

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by LAlearning » Thu Oct 20, 2016 11:57 am

I can't believe CALPERs hasn't figured this out yet :oops: :oops: :oops:
I know nothing!

grog
Posts: 396
Joined: Sat Jul 20, 2013 1:09 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by grog » Thu Oct 20, 2016 1:09 pm

Jack FFR1846 wrote:Sounds like what I do with my portfolio. I wonder if he rebalances on his birthday too.
Do you do it on your birthday because it's a treat or is it just so you don't forget?

letsgobobby
Posts: 12078
Joined: Fri Sep 18, 2009 1:10 am

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by letsgobobby » Thu Oct 20, 2016 2:31 pm

two questions:

is he a member of the Bogleheads Vegas chapter?

does he take lunch meetings with fans? would be fun to eat lunch with him next time I'm in Vegas.

gibbydds
Posts: 5
Joined: Thu Sep 03, 2015 3:05 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by gibbydds » Thu Oct 20, 2016 2:39 pm

LAlearning wrote:I can't believe CALPERs hasn't figured this out yet :oops: :oops: :oops:

CALPERS Chief Investment Officer Theodore H Eliopoulos pulled in $799,000 in 2015. I guess making yourself look busy has it's perks, even if it doesn't make your investors any money.

CALPERS also recently cut their fiscal outlook from an expected return of 7.5% to 6.5%. How many here think they will also cut executive pay?
Last edited by gibbydds on Thu Oct 20, 2016 2:51 pm, edited 1 time in total.

boglephreak
Posts: 441
Joined: Fri Apr 22, 2016 5:16 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by boglephreak » Thu Oct 20, 2016 2:46 pm

good article. what concerns me about this pension is this statement:
Despite the investment success, Nevada only has about 73% of assets needed to fund future retirement obligations to workers.
that money has to come from somewhere, and its concerning that a lot of pension managers choose to take additional risk to try to make up for it, which in my opinion, leads to additional shortfall, which leads to the need to take additional risk to make up for the additional shortfall.

so, im glad how this guy is doing his job, but concerned he is going to get fired someday because someone decides that his "risk-aversion" is not making up for the shortfall that, honestly, should not come from investing but rather a third party source.

randomguy
Posts: 8417
Joined: Wed Sep 17, 2014 9:00 am

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by randomguy » Thu Oct 20, 2016 2:56 pm

Grt2bOutdoors wrote:
209south wrote:Very cool - any idea what Nevada's asset allocation is?
https://www.nvpers.org/public/investmen ... stpers.jsp

More importantly, check out the IPS of the pension fund - seeking to generate an 8% annual return and 4.5% above inflation? I think the CIO needs a reality check. Might as well wave a magic wand - it isn't going to happen in the for-seeable future. He needs to read more.......
4.5% for a ~70/30 AA is very reasonable. They might not get it over the next say 10 years but the odds of getting it over the next 30 years are very decent.

It will be interesting to see how easy it is for the pension plan to stay the course during an extended down turn like 2000-2002. And if there are plans to adjust the AA as liabilities change.

I also bet the guy does a lot more than the article suggests but those things don't involve buying and selling investments.

lgs88
Posts: 263
Joined: Tue Jun 07, 2016 7:48 am

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by lgs88 » Thu Oct 20, 2016 2:57 pm

Oicuryy wrote:Nevada PERS is only 73% funded. If you don't save enough you won't have enough no matter how frugally you manage your investments.

Ron
Some commenter on the WSJ article remarked that Edmundson's strategy would be appropriate if Nevada's pension obligations were fully funded. But since they're not, he should be engaged in all sorts of exotic stuff to achieve additional return.

If only it were that easy.
merely an interested amateur

letsgobobby
Posts: 12078
Joined: Fri Sep 18, 2009 1:10 am

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by letsgobobby » Thu Oct 20, 2016 3:00 pm

He could tilt more in the share that is equities, while reducing the equity allocation (ie, a Larry or barbell approach) but should distract from a fundamentally passive approach.

User avatar
LadyGeek
Site Admin
Posts: 57825
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: [WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing]

Post by LadyGeek » Thu Oct 20, 2016 3:55 pm

I merged matjen's thread into here. The software sorts posts by time, CABob was first. I also retitled the thread.

Please stay focused on investing. Rants about the pension system are off-topic.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
abuss368
Posts: 16076
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!

Re: [WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing]

Post by abuss368 » Thu Oct 20, 2016 4:47 pm

Very good and Boglehead article. Thank you for sharing.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

User avatar
raven15
Posts: 382
Joined: Sun Nov 30, 2014 8:01 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by raven15 » Thu Oct 20, 2016 7:20 pm

letsgobobby wrote:two questions:

is he a member of the Bogleheads Vegas chapter?

does he take lunch meetings with fans? would be fun to eat lunch with him next time I'm in Vegas.
The dude abides in Carson City.
It's Time. Adding Interest.

topofthebellcurve
Posts: 113
Joined: Thu Jun 30, 2016 12:11 am
Location: Boston

Re: [WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing]

Post by topofthebellcurve » Fri Oct 21, 2016 12:23 am

As BH's resident Matt Levine Fanboy, here's his take on the topic:
A different approach to money management.

I'm sure Cohen has fun, and he is a billionaire, and he owns Picassos and a shark in formaldehyde and so forth, but it is just possible that Steve Edmundson, who runs the Nevada Public Employees' Retirement System's investment portfolio, has the best job in the investing business. "The Nevada system’s stocks and bonds are all in low-cost funds that mimic indexes. Mr. Edmundson may make one change to the portfolio a year." He does not, it is safe to say, take five screens with him wherever he goes. He works from 8 a.m. to 5 p.m., and spends his days "preparing board-meeting materials and on administrative tasks," pondering his lunch ("'Great days,' he says, are when his wife makes lunch—a BLT or tuna-fish sandwich"), and blowing off Wall Street salespeople:

Mr. Edmundson returns emails and calls from money managers pitching him products.
The typical call lasts about five minutes. He lets callers down gently, deflecting advances by concluding the offering isn’t a good fit and thanking them for the information.
“I’ve become very good at saying no,” he says. “I don’t try to lead them on, so they don’t get false hope.”

Look, it's obvious that getting paid six figures for doing nothing would be a pretty good job. But it might get a little boring. A job that lets you mostly do nothing, but break up the monotony with comical five-minute phone calls from money managers desperate for business that they have no chance of winning, seems like the perfect mix of relaxation, entertainment, and that feeling of smugness that makes for a truly fulfilling career. Sign me up.

Also he is outperforming Calpers and many other state pension funds.
Full article:https://www.bloomberg.com/view/articles ... and-cabals

finite_difference
Posts: 1475
Joined: Thu Jul 09, 2015 7:00 pm

Re: WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing

Post by finite_difference » Fri Oct 21, 2016 7:32 am

mpowered wrote:
Bob B wrote:I wonder what Mr. Edmundson's salary is since he does nothing all day? How big of a staff does that take?
It says it in the article. Salary is $127,121.75. He has no staff.
I think it's a bit of hyperbole to say that he does nothing.

Although he does nothing in terms of active trading, that doesn't mean he doesn't need to pick up the phone, create presentations and reports, make sure that things are running as they should, etc. Especially if he's the only person.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

User avatar
TimeRunner
Posts: 1575
Joined: Sat Dec 29, 2012 9:23 pm

Re: [WSJ - What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing]

Post by TimeRunner » Fri Oct 21, 2016 10:12 am

I would guess he spends a lot of time explaining and defending his investment approach to Board members, politicians, union leaders, Wall St sales people, and retirees who all think they can juice returns by doing x,y, and z. Maintaining inner peace against that constant din is work in and of itself.
One cannot enlighten the unconscious.

Post Reply