NMI Fund’s investment assets drop by $9M in May

The NMI Retirement Fund recorded a significant decline in its market investments last month—a loss of almost $9 million.

Fund administrator Richard Villagomez said the pension program’s investment portfolio was valued at $320.4 million as of May 31, 2011, a big drop from the $329.2 million posted in April 30, 2011.

Fund records indicate that April saw a positive monthly return of 2.89 percent in its investments compared to a negative -1.28 percent return in May.

The dismal market performance also dragged down the fiscal year returns from 15.74 percent in April to 14.26 percent in May.

The Fund’s assets are invested in common stocks, fixed income, hedge funds, and money market. Besides investments in international markets, the Fund’s portfolio also includes local investments: the Member Home Loan Program, investments in Group Health Life Insurance, interest payments on the judicial building loan, and the Commonwealth Government Employee Credit Union.

The Fund is currently in transition with the adoption of a new asset allocation model and the entry of new money managers. From eight, the agency now has 11 companies handling its diverse portfolio.

Villagomez also disclosed yesterday that total drawdown—withdrawals from the investment fund—now totals $37.4 million as of June 10, 2011.

The Fund earlier projected that the drawdown amount may exceed the authorized ceiling of $52.4 million by the end of the fiscal year in September due to the government’s cash-flow problems. Continued delays in the central government’s employer contribution are seen to boost the Fund’s drawdown amount by $800,000 beyond the authorized ceiling.

The Fund has an average monthly drawdown of around $2.4 million.

Drawdown funds are used to pay for the pension benefits of members and other obligations.

In fiscal year 2010, the Fund noted some $14 million “savings” in its projected drawdown as a result of increased contribution from the government and remittance of taxes pursuant to a court judgment.

Meantime, in its meeting on Rota Friday, the board of trustees deferred any discussion and decision on the long-delayed pension software system.

The board earlier uncovered that the Fund had already paid over $402,000 for a non-functioning pension software project designed by Express Electronics Ltd. It was initiated in 2008 and has yet to be completed despite being 90-percent paid. The board recently hired a program analyst who uncovered several inaccuracies that may take more time and resources to fix.

The Fund’s decision whether to pursue the project or not will be based on the program analyst’s final evaluation report.