The State of Wisconsin Investment Board has signed a lease to relocate in the summer of 2022 to a new building to be developed by Smith Gilbane at Madison Yards on Madison’s near westside. The new facility will provide the agency with the space needed to house its award-winning staff and to increase its ability to manage assets internally. Internal management, using staff in Wisconsin, is a key cost-saving measure that helps grow the fully funded Wisconsin Retirement System.
“SWIB is evolving with the rest of the investment industry. To meet our fiduciary duty, our investment strategy has become more sophisticated and diverse. We need to continue to build the necessary expertise to support the complexity of managing assets in a more challenging market environment and to do so we need to build out our infrastructure and technology to support that expertise,” said SWIB Executive Director and Chief Investment Officer David Villa. “By growing our internal management, we are able to implement a robust investment strategy designed to effectively manage the WRS at a lower cost than external managers. And the more investments we can manage in Madison, the less we have to pay to Wall Street firms.”
SWIB manages more than 50% of all funds internally, up from 21% in 2007, with plans to increase that percentage over the next few years. SWIB expects to continue to grow its staff to achieve those plans.
SWIB’s costs are lower than its peers in part because SWIB can manage assets internally for multiples less than what it would cost to pay external managers. In 2019 alone, those cost savings over peers translated to over $70 million for the WRS, and over the past 10 years, the savings totaled approximately $1.3 billion.
Even considering emerging work from home practices, SWIB has outgrown the available space at its office in downtown Madison. The proposed building is part of the 21-acre complex that includes a State of Wisconsin office building that opened in 2018 and houses the Department of Employee Trust Funds. SWIB will begin the process to sell its existing downtown office building overlooking Lake Monona, which is owned by the WRS. The pension plan will benefit from the gains expected from the sale of the building.
“SWIB’s strategic approach to invest in highly diversified and complex investment strategies and to manage assets internally becomes even more critical to maintaining a strong WRS during challenging market environments,” said Board of Trustees Chair David Stein. “This new office space will also allow SWIB to attract and retain the talent needed to manage the WRS and enhance its technology to support those strategies.”
Advances in technology design will provide a superior infrastructure that SWIB’s aging building cannot support for SWIB’s technology, network systems, and growing number of data sources. It will also provide enhanced security and flexibility for managing the trust funds.
SWIB’s current office building was purchased by the WRS about 17 years ago. SWIB’s move to its new, more efficient location will also spur the redevelopment of its current premier location.