Dan MacDonald to STRS Board 3/16/2023: Demand to know the full story on passive investments

From Dan MacDonald

March 20, 2023

NEED FOR PASSIVE INVESTMENTS GURUs

Good morning STRS Board. Happy St. Patrick’s Day. I am Dan MacDonald, an STRS retiree with 38 plus years of service. I am also the Executive Director of Local 279-R, North East Ohio AFT retirees.

Last month Richard Ennis and William F. Sharpe along with Edward Siedle and Hans Christian Andersen were referenced. I took to Google for reference and searched “Passive Financial Investment Gurus.” I found an article titled “Legendary investment guru Peter Lynch says the move to index funds is a ‘mistake.’” L.A. Times Michael Hiltzik addressed Lynch, direct indexing, and much more, but concluded that Lynch’s claim that active stock-picking beats the market, simply isn’t true. “For much of the nearly half-century in which index funds have been an option for the average investor, they’ve been the way to go. It’s commonly said on Wall Street that past performance is no guarantee of future results. But that applies more accurately to individual investments. As a class, the record of index investing in the past is indisputable.”

So here at STRS we get monthly presentations and articles to defend a large investment department. You, the eleven of you, the fiduciaries that are appointed and elected to be vigilant of this pension. Use the talent on this Board to schedule a mix of passive investment gurus to give presentations and listen to the other side of active management. Probably, more than half of you need to know about passive investments, their timelines, their pros and cons. Make a motion and demand to hear the full story. Ultimately, both styles are needed, but it is obvious to the audience that only one style is presented by STRS staff and then reinforced by STRS consultants. By the way, speaking of passive investments, how is that new real estate office in Chicago performing?

Ultimately, you are on the Board to represent actives and retirees and this pension. Actives need their benefits re-enhanced and retirees need your help with COLA and more.

Additionally, since the Investment Department didn’t report this morning, if STRS invested in Silicon Valley Bank and/or Signature Bank, I hope you acknowledge any current losses, but I also acknowledge no one bats 1,000. Transparency.

[In the afternoon, staff did addressed the loss.]