It is no surprise to hear that over the course of a year, SWIB makes thousands of investments. When thinking about SWIB’s investment strategy to grow and protect the trust funds of the Wisconsin Retirement System, investments in stocks, real estate, and private equity are probably what come to mind first. But for SWIB to continue to be a premier public pension asset manager, SWIB also needs to invest in itself.
In an ever-changing and increasingly more complex financial world, SWIB is investing in the technology and people needed to manage more than $108 billion in WRS trust funds. It is an investment that helps SWIB optimize its costs which has a significant positive impact on the WRS trust funds.
According to CEM Benchmarking, an independent cost benchmarking consultant, SWIB, when compared to the median costs of its peers, saved approximately $90 million in 2017 and $1.3 billion from 2008 to 2017 for managing the same amount in assets, all due to more internal management and having few high cost assets. SWIB uses its own staff to manage more than half of the WRS assets internally.
“We have implemented a complex and sophisticated investment strategy designed to meet the challenges of the financial market head on, while helping grow and protect the WRS assets,” SWIB Executive Director/Chief Investment Officer David Villa said. “Because a majority of our total cost of management comes from fees paid to external managers, our strategy includes increasing internal management when possible, which is a better value for the trust funds.”
To successfully implement its strategy, SWIB actively recruits top talent to hire the best qualified candidates to support the investment strategy and increase the amount of assets managed overall and internally. SWIB continues to add staff across the organization including investment management, administration, agency business, and operations and technology.
To adequately and efficiently process trades, measure risk, and management investments, SWIB also is continually enhancing its systems and processes. The investments in technology provide staff better access to high quality and timely data and improve SWIB’s ability to monitor and manage risk.
“Thanks in part to the legislature granting SWIB’s independent Board of Trustees budget and staffing authority, we have been able to adapt to changing market conditions and to keep the WRS well positioned to meet its promised retirement benefits today and in the future,” Villa said.
“This flexibility has helped us make a commitment to investing in the staff and technology and systems needed to support our work and to continuously improve. We are also able to attract and retain talented professionals with the skills needed to support the investment strategies we have implemented.”
“As important as it is to have a strong investment strategy," Villa continued, "it is equally important to optimize costs. We will continue to invest in people, processes, and technology because those investments provide the greatest edge in achieving our long-term goals and delivering added returns.”