Katherine Molnar, Chief Investment Officer of the Fairfax County Police Officers Retirement System, and Andrew Spellar, Chief Investment Officer of the Fairfax County Employees’ Retirement System, discuss how alternative investments help provide secure retirements for Northern Virginia’ public servants.
Key Takeaways:
- Portfolio diversification, including alternative investments, supports the health of Fairfax County retirement systems.
- Alternative investments help provide secure retirements for Fairfax county public servants by decreasing volatility in the pension portfolio.
- Dampening portfolio risk through investments in alternatives both secures the financial future of Fairfax County employees and saves money for the county’s taxpayers.
Transcript:
[00.00-00.05] We have three retirement systems in Fairfax County. All of us have invested interest in the health of our retirement systems.
[00.06-00.18] My name is Katherine Molnar, and I’m the Chief Investment Officer of the Fairfax County Police Officers Retirement System. It’s roughly a $2 billion defined-benefit pension plan that benefits the police officers of Fairfax County, Virginia.
[00.19-00.31] I’m Andrew Spellar. I’m the Chief Investment Officer for the Fairfax County Employees’ Retirement System. It’s a $5 billion defined-benefit plan in Fairfax, Virginia. There’s about 11,000 retirees and about 14,000 active employees.
[00.32-00.42] Fairfax County is a widely recognized, well-run institution in government, and we have dedicated employees that are on the front lines every day providing all different types of services across the county.
[00.43-00.56] We have an actual estimated return of 6.75 percent, and we need to get that year in and year out. And alternative investments, including hedge funds, is a big part of that, providing the secure retirement for our police officers with less volatility.
[00.56-01.08] We are much more broadly diversified than most public pension funds, and a key component of that is hedge funds, where we’re driving excess return and incremental return to the system, as well as diversification in that portfolio.
[01.09-01.21] Investments in alternatives can help to lower the portfolio’s overall risk, and by doing so, we’re able to secure the financial future of the police officers but also the Fairfax County taxpayers themselves.
[01.22-01.37] The other stakeholder at the table is the taxpayers, and the extent to which we underperform our assumed rate of return could ultimately result in increased taxes. We’re very cognizant of that. We’re taxpayers as well. It’s keenly in front of our minds when we’re putting our portfolio together.
[01.37-01.51] They entrusted their financial futures to this system, and I take that very seriously, and I think about that every day. By using alternatives, by dampening the portfolio, there’s a greater chance we’re going to be able to earn 6.75 percent year in and year out.
