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NMIRF taps M&I for securities lending
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Posted on Jun 08 2000
The Northern Marianas Retirement Fund Board has chosen M&I (Marshall and Isley) Investment Management Company to do securities lending investment, according to its administrator, Juan S. Torres.
He said M&I’s appointment was based on the recommendation of the Fund’s Investment Committee, which conducted a thorough analysis of the offers made by the firms that were short listed by Merril Lynch, the Fund’s consultant.
“M&I offers a better package to fit our desire for portfolio diversification and at the same time realizing minimal risk,” Mr. Torres said.
The Committee, composed of Board of Trustees Marian Tudela, Charles P. Reyes and Susana T. Mafnas, has determined that the Fund can generate between $50,000 to $75,000 a year and more as the Fund grows from investment in securities lending.
“The realized return on such investment is a welcome addition to the Fund’s growing portfolio and asset diversification with very minimal risk,” the committee said in a report to Board Chair Vicente C. Camacho.
The decision to hire M&I was a result of consultation with the Fund’s consultant, Merril Lynch, which felt that there was practically no risk getting involved in this type of investment.
“Basically the Fund is indemnified and a sufficient collateral of 102 percent is secured against any securities of the Fund pledged as a safety net. We are therefore protected by a couple of layers of safety margin in so far as potential losses,” the Committee said.
In hiring M&I, the committee analyzed various factors such as the length of time the firm has been in the type of business, the size of the portfolio of lendable assets, revenue projections in terms of original revenue estimates versus actual revenue, client service (i.e., efficiency, response time on inquiries and other concerns of client), reporting method (readability or how easy to read reports, etc.), the average mismatch between investments and loans with respect to collateral investments and client relationship with each respective firm.
