73: PERSI's Bob Maynard – Retirement and Reflections on Career

Conversations with Institutional Investors

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In this episode of the [i3] Podcast, we speak with Bob Maynard, Chief Investment Officer of the Public Employees Retirement System of Idaho (PERSI) at the eve of his retirement, after 30 years with the fund. We look back at how a job as the deputy attorney of Alaska saw him getting involved with investing and how he has stuck to his mantra of keeping it simple. “Whenever I get a bright idea, I go to a dark room and lay down until it has passed,” he quips. Bob addresses whether defined benefit systems are doomed, expels myths around US pension funds underfundedness and why he believes CalSTRS’ Chris Ailman is the best CIO on the planet. 1:00 Moving to Alaska at a time when it was still a frontier state; the state was only 19 years old 6:00 Working on some of the largest oil and gas litigation cases in US history, including the Trans Alaska Pipeline case 9:00 The Alaska Permanent Fund and the link with oil and gas litigation 11:00 Slowly the fund moved away from just bonds to include real estate. So I couldn’t afford my own house, but I knew how to buy an office block in New York. 12:00 Setting up the first currency program with the help of Fischer Black 13:30 Phone calls with Fischer Black locked you into a way of thinking about markets and I probably used that more than anything over the last 30 years. 15:00 [At PERSI] we only do eight to 10 things [in our investment strategy], but if I would be doing 25 things then currency would be in there. 16:00 The mean variance model is not that complicated 17:30 Joining PERSI you found a fund that was more than 60 per cent underfunded. Did you know that? 19:30 “The chair said: ‘Just get us in the middle of the pack’, and I thought: ‘I can do that; I can be mediocre” 22:00 There are a thousand ways to invest. You just have to find the right way for your particular set of circumstances. 26:00 The 90s were a great time to be a 70/30 fund. 27:00 The best place to be in the last 10 years was the S&P 500 [index] 28:30 [Institutional investors] are not long term investors; we use it as propaganda to get us through tough times. 31:00 There are times in history where there is a fundamental shift in equity markets, but whether that means you should move out of equity markets…There have been a number of those [approaches] since the 1990s that looked at that and none of them have proven to be able to move through troubled times. 32:00 When there is excess liquidity in the system, all sorts of things work 36:30 The idea of what an unfunded liability is is completely misunderstood. Under an entry age normal accounting system we assume that people are going to earn double of what they earn today at the end of their career. If we would shut off the system today and look at the actual liabilities then we would be 140 - 150 per cent funded. 38:00 There are funds that are in trouble, but that is because some of them cut their contribution rate to below cost 45:00 Investing is about attitude: whenever I get a bright idea, I go to a dark room and lay down until it has passed 47:00 Listening and learning from other state pension funds’ board meetings. I’ve learned more from listening to [Chris] Ailman than from my own fund; he is the best CIO in the world as far as I’m concerned. 50:00 You retire on 30 September 2022. Any plans? “I’m going to do what I do best: nothing”.

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