Investment Plan 2011 - OPERS

Defined 

Benefit 

Fund 

Ohio PERS 

Investment 

Plan 

Health 

Care 

Fund 

2011 

Defined 

Contribution 

Fund 

277 East Town Street Columbus, Ohio 43215-4642 

www.opers.org 800-222-7377

OPERS 

2011 ANNUAL INVESTMENT PLAN 

Table of Contents 

Report from the CIO ............................................................................................................... 1 

Board Policies Governing Investment Activities ...................................................................... 5 

Staff Committee Structure ...................................................................................................... 5 

Staffing ................................................................................................................................... 7 

Peer Group Comparison ........................................................................................................12 

Risk Management .................................................................................................................13 

FUND STRATEGIES ................................................................................................................14 

Defined Benefit Fund .............................................................................................................14 

Health Care Fund ..................................................................................................................17 

Defined Contribution Fund .....................................................................................................20 

ASSET CLASS STRATEGIES .................................................................................................22 

Tactical Outlook .....................................................................................................................22 

Public Equity..........................................................................................................................26 

Public Fixed Income ..............................................................................................................27 

Alternatives ...........................................................................................................................29 

Private Equity ........................................................................................................................29 

Real Estate ............................................................................................................................29 

Hedge Funds .........................................................................................................................30 

Opportunistic .........................................................................................................................30 

Commodities .........................................................................................................................30 

APPENDIX ...............................................................................................................................31 

Appendix A – Economic Outlook ...........................................................................................31 

Appendix B – Staff Biographies .............................................................................................39

Ohio Public Employees Retirement System 

2011 Annual Investment Plan 

Report from the CIO 

The following outlines the 2011 investment management plans for OPERS Defined Benefit, 

Health Care and Defined Contribution Funds. It also summarizes initiatives and processes 

as well as performance and risk expectations. 

Fund Strategies 

The Defined Benefit Fund and Health Care Fund will continue to transition toward their 

strategic asset allocations approved by the Board in 2009 and 2010. That transition was 

approximately two-thirds completed in 2010. The Defined Contribution Fund will be 

managed with passive management and self-directed brokerage account approaches 

adopted in 2010. 

For planning purposes, the following table outlines the projected total base case return with 

ranges. The base case return for 2011is lower than that for 2010 largely due to projected 

lower returns for fixed income. The return ranges are higher for 2011 than 2010 because 

of greater uncertainty surrounding the Fed’s quantitative easing impact. 

Defined Benefit Fund 

Base Case Return Active Total 

Return Range Return Risk 

2011 6.69 -11.45 to 30.04 0.40 11.20 

2010 7.56 -9.88 to 27.41 0.33 10.70 

Health Care Fund 

- - - - - - % - - - - - - 

2011 5.85 -10.07 to 26.05 0.36 9.10 

2010 6.52 -6.39 to 21.83 0.39 8.70 

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- - - - - % - - - - - - 

The active return shown in the above table are derived from an information ratio of 0.40 

provided by Mercer Investment Consulting. The total risk of the Funds is marginally higher 

to reflect anticipated tactical asset allocation activities. 

The total expected returns for the Defined Contribution Funds are intended to be similar to 

the underlying market benchmarks since they are passively managed. 

Additional details regarding the Fund’s strategies are included following this report. 

Asset Class Strategies 

As outlined in the materials following this report, the Defined Benefit and Health Care 

Public Equity allocations during 2011 are planned to transition from a 50/50 U.S. 

Equity/Non-U.S. Equity mix to a global mix, based on the MSCI All Country World Index 

(Investable Market Index) weighting between U.S. Equity and Non-U.S. Equity. In addition, 

we will be adding externally managed small-cap, mid-cap, 130/30 portfolios, internally 

managed enhanced index portfolios, Russell 200 options and Russell 200 index portfolios,



an internally managed international equity index portfolio and an internally managed 130/30 

portfolio. 

With regard to the Defined Benefit Fund Fixed Income allocation, its allocation to the subasset 

class, Long Bonds, are planned to be further reduced with a corresponding increase 

in the Core Fixed sub-asset class allocation. 

Regarding alternative investments, additional Hedge Fund managers are expected to be 

selected. 

Core real estate properties are intended to be reduced with increases to opportunistic and 

distressed real estate equity and debt. Additional Private Equity commitments are planned. 

For the Opportunistic Fund, an internally managed Emerging Markets currency portfolio 

has been developed, was funded in November 2010 and will likely be expanded. The 

Opportunistic Debt portfolios will be restructured from a buy and hold to a more active 

strategy. 

The Tactical Asset Allocation Committee will continue in 2011 to determine overweights 

and underweights to various asset classes. The Fund Asset Allocation Strategy Committee 

will continue to monitor overall Fund asset and risk allocations. 

Initiatives 

Each year the Investment Division undertakes significant initiatives to enhance the 

capabilities and performance of the Funds. The following are the planned initiatives for 

2011. 

New 2011 Initiatives 

Transition the Public Equity allocation to a market-based global weighting between 

U.S. Equity and Non-U.S. Equity 

Begin internally trading U.S. equities under management by external managers 

Further enhance the Fund’s risk management monitoring and analytics systems 

Hire external 130/30, active small and mid cap U.S. equity, Hedge Fund and non- 

U.S. equity core, small cap and emerging market managers 

Internally manage an MSCI EAFE stock-based index portfolio, opportunistic debt 

portfolio, Russell 200, Russell 800 and Russell 2000 U.S. enhanced index equity 

portfolios, and a Russell 200 equity and options-based portfolio 

Internally manage a portion of the securities lending portfolios 

Expand Hedge Fund management 

Expand Emerging Markets currency portfolio 

Restructure the allocations among the internally managed index portfolios 

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Continuation of 2010 Initiatives 

Transition towards the new asset allocation targets for the Defined Benefit, Health 

Care and Defined Contribution Funds 

Expand risk management and compliance capabilities 

Increase active risk in Public Equity 

Enhance the investment options offered to Defined Contribution Fund members 

Implement standardized new Investment Management Agreements with managers 

Implement internal securities lending of U.S. Treasuries and TIPS 

Expand operational and trading capabilities to internally manage additional U.S. 

equity mandates and commodities exposure 

Expand asset class and portfolio hedging strategies using derivatives 

Develop improved Benefit cash flow forecasting methods 

In 2010, the Investment Division completed a number of other investment-related and 

operational initiatives including updating all Investment Policies, creating a Hedge Fund 

Strategy and Policy, developing a Private Markets reporting and performance database, 

and significantly increasing private equity and private real estate commitments, launching 

and completing 5 major external public manager searches and increasing Staff by 10%. 

Resources 

The Investment Division is comprised of 60 positions with 7 vacant positions. The 53 

current Staff members collectively have 790 years of investment experience and 376 years 

with OPERS. There are 50 individuals, or 94%, with undergraduate degrees, 33 

individuals, or 62%, with graduate degrees, 2 individuals, or 4%, with doctoral degrees and 

31 individuals, or 58%, which are CFA Charterholders. Staff members have worked for an 

average number of 2 firms prior to joining OPERS. Additional details are provided in the 

Staff biographies in Appendix B. 

The Investment Division submitted an estimated compensation and operating budget of 

$18.68 million for 2011, a 4.4% increase over 2010. The budget includes the Finance 

Department’s estimate of the 2011 incentive compensation payout, which reflects 2010 

investment performance. The budget reflects the Division’s effort to maintain internal 

investment management where appropriate due to its material cost savings and to manage 

related administrative expenses. 

The total cost to manage the OPERS asset base in 2011 is estimated to be 43 basis points. 

The total estimated cost of 43 basis points translates into $313.58 million which is 44.3% 

higher than the previous year. This cost increase reflects many factors, including a shift in 

asset mix to more complex asset classes (Private Equity/Real Estate/ Hedge Funds), more 

Page 3



active management and a higher degree of external management. The cost assumes a 

long-term growth trend in the fund’s asset base, whereas an unanticipated bear market 

would reduce the cost. The breakdown of the budget is discussed in greater detail later in 

this document. 

Summary 

Calendar year 2010 was a very productive period for the OPERS investment team. The 

Board approved a new asset liability study late in 2009 and already two thirds of the 

transition to the new asset allocation, primarily the publicly traded asset classes, will be 

completed by year end 2010. The remainder of the transition involves increases to illiquid 

investments, primarily real estate and private equity, which will be completed as 

opportunities present themselves. Changes to the hedge fund program were approved by 

the Board in 2010 and will be implemented in 2011 along with the other initiatives detailed 

in this Plan. 

With the strategic guidance of OPERS Board of Trustees, the OPERS Investment team is 

well prepared to meet the investment challenges in 2011 as we strive to succeed in an 

uncertain investment environment. 

Respectfully, 

John C. Lane, Chief Investment Officer 

Page 4



Board Policies Governing Investment Activities 

The following exhibit illustrates the structure and relationship of the policies within the total 

System and its three investment Funds. 

DEFINED BENEFIT 

FUND 


Objectives and Asset 

Allocation Policy 

Public Equity Policy 

Public Fixed Income Policy 

Private Equity Policy 

Real Estate Policy 

Broker - Dealer Policy 

Corporate Governance 

Derivatives Policy 

External Investment Managers’ Insurance Policy 

External Public Manager Evaluation Policy * 

External Public Manager Search Policy * 

Iran and Sudan Divestment Policy 

*Under consideration to be replaced with procedures 

OPERS FUNDS 

FUND POLICIES 

HEALTH CARE 

FUND 




ASSET CLASS POLICIES 

INVESTMENT-WIDE POLICIES 

Staff Committee Structure 

The CIO utilizes a variety of committees, working groups and meeting structures to govern 

the Investment Division’s activities. This internal governance arrangement enhances 

collective inputs, retains institutional knowledge, provides documentation of the due 

diligence process and other processes, promotes transparency and accountability and 

formalizes decision-making processes. These committees are designed to combine 

structure and flexibility to efficiently bring the appropriate decision makers together on a 

timely basis and maintain a controlled environment to minimize operational risk. 

Page 5 

DEFINED CONTRIBUTION 

FUND 




Cash Policy 

Commodity Policy 

Hedge Fund Policy 

Opportunistic Fund Policy 

Material Nonpublic Information Policy 

Ohio-Qualified & Minority Manager Policy 

Personal Trading Policy 

Proxy Voting Guidelines 

Responsible Contractor Policy 

Securities Lending Policy 

Soft Dollar/Other Commission Arrangements Policy



The following provides an outline of the Investment related committees. 

Committee/Meeting Purpose and Description 

Investment Committees - Approvals and Decisions 

Broker Review* Monitor/Approve and Evaluate Brokers, Submit ORSC Reports 

Compliance* Escalate and Resolve Compliance Issues 

Counterparty* Set Counterparty Limits and Monitor Counterparty Exposures 

External Public Markets* Review External Public Managers and Manager searches 

Fund Asset Alloc. and Strategy* Implement Asset Alloc. & Inv. Strategies, Cash Forecasting, Fund 

and Portfolio exposure metrics and Manager Guidelines 

Operational Risk* Identify and Monitor operational risks 

Risk Steering* Risk Assessments and Prioritization 

Tactical Asset Allocation* Make asset asset allocation decisions using derivatives 

Investment Meetings - General 

Defined Contribution Oversight Coordinate with DC team 

Investment Strategy Group Review asset class performance and projections 

Private Equity Review PE Opportunities for CIO approval 

Real Estate Review RE Opportunities for CIO approval 

Eagle Conversion/IT Coordinate with IT on system changes and upgrades 

Investment Meetings - Internal Portfolio Management and Administration 

Global Bonds Sector Reviews/Outlooks, Portfolio Composition and Risk Management 

Index and Derivatives Portfolios Review Markets, Strategies and Internally Managed Index Portfolios 

Transition Management Transition assets between managers & conduct rebalancings 

Internal Equity Index Strategy, Tactics, News Flow & Training 

Non-Investment Division Committees - Committees with Investment Staff Involvement 

Advisors Council* Iran/Sudan Divestiture* Management Council* 

Corporate Governance* Leadership Council* Technology Council 

Guiding Council* 

* Committee has a charter and maintains minutes 

The committees and working groups vary in both the frequency of meetings and the degree 

of structure and formality - some provide informal information sharing and some have 

formal written charters. The CIO or deputy CIO’s chair the committees, or provide 

leadership to the working groups or formal meetings. The CIO is informed of all activities 

and committee activities. 

Page 6



Staffing 

Recruiting and retaining the best and most talented Staff is a critical priority for the 

Investment Division. The following table shows the anticipated full staffing for 2011. 

Page 7 

Target Staffing for Year End 2011 

Office Total 

of the Internal External Invest. 

CIO Funds Funds Division 

2010 Investment Plan Projected Staffing 8 35 16 59 

Current Staffing 7 33 13 53 

Vacant Positions - To be filled in 2011 0 4 3 7 

Year End 2011 Target Staffing 7 37 16 60 

Status of New and Current Positions 

Position Vacant 

Fixed Income Internal Management Cash/Sec Lending Analyst 1 

Fund Management Fund Manager - Fund Management 1 

Fund Management Non-U.S. Equity Trader 1 

Fund Management Fund Management Analyst 1 

External Management Portfolio Manager: Manager - Private Equity 1 

External Management Portfolio Manager - Private Equity 1 

External Management Hedge Fund Analyst 1 

Total 7

Investment Organizational Structure 



John C. Lane 

CIO 

Mary Ann Kabbaz 

Executive Assistant 

Rick Shafer 

Deputy CIO 

External Mgt 

Kimberly Van Gundy 

Inv Adm Analyst 

Joyce Williams 

Portfolio Assistant 

Dan German 

Risk Mgr Risk Oversight 

Deryck Lampe 

Sr PM Active Equity 

Paul Greff 

Sr PM Fixed Income 

Gerry Peters 

Sr PM Quantitative Equity 

Vacant 

Fund Manager Fund Mgt 

Prabu Kumaran 

Sr Risk Analyst Risk Oversight 

Ryan Khoury 

Inv Analyst Internal Equity 

Xinyang Gu 

Quant Analyst 

JG Lee 

Fund/Quantitative Manager 

DeAnne Rau 

PM External Mgt 

PM Manager Private Equity 

Chris Rieddle 

PM Fixed Income 

Josh Biddinger 

Assoc Risk Analyst Risk Oversight 

Xiaoling Wang 


Dave Buchholz 

Fund Mgt Analyst Fund Mgt 

Dan Sarver 

PM External Mgt 

Vacant 

PM Private Equity 

Erick Weis 

Index Portfolio Manager 

Greg Slone 

Sr Op Risk Analyst Risk Oversight 

Eric France 


Andrew Urban 


John Blue 

Sr Analyst External Mgt 

Louis Darmstadter 


Scott Murray 

PM Internal Equity 

Roger Tong 

Quant Analyst 


Brian Wright 

Sr. Analyst External Mgt 

Samir Sidani 


Vonetta McDonald 

Analyst 

Tim Swingle 

Sr Analyst Internal Equity 

Erik Cagnina 


Joan Stack 

Trading Mgr 

Hedge Fund Analyst 

Greg Cotterman 

Analyst Private Equity 

Chris Gregson 


Sajjad Hussain 

Struct Pdt Analyst Fixed Income 

Page 8 

Matt Sherman 

Sr Trader 

Brad Sturm 

PM Real Estate 

Kevin Martin 

PM Internal Equity 

Mark Ehresman 


Christy Ruoff 

Trader II 

Steve Stuckwisch 

PM Real Estate 

Steve Barker 


Tony Enderle 

Sr Analyst Fixed Income 

Trader 

Lewis Tracy 

Sr Analyst Real Estate 

Jack Lake 


Nick Kotsonis 


Todd Soots 


Mike Parker 

Sr Inv Analyst Internal Equity 

JoAnn Yocum 

Inv Asst Fixed Income 

Joe Bouschelle 


2010 Current Positions 

Positions Filled in 2010 

Vacant Positions 

2011 New Positions 

Jerry May 

Cash/Sec Lending Manager 

Teresa Black 

Cash/Sec Lending Analyst 

Cash/Sec Lending Analyst



Staffing Costs 

Assuming full staffing levels in 2011, the chart below details the estimated $11.32 million of 

salaries, benefits and incentive compensation for the Investment Division. This represents 

approximately 1.55 basis points of cost compared to 1.62 basis points projected in the 2010 

Annual Investment Plan. 

Total 2010 

Internal External Invest. Projected 

Mgmt. Mgmt. Division Total 

Salaries 5.49 2.22 7.71 7.47 

Benefits 1.87 0.74 2.61 2.60 

Incentive Compensation 0.75 0.25 1.00 1.20 

Total Compensation 8.11 3.21 11.32 11.27 

Average Assets ($ billions) 35.31 37.66 72.96 69.56 

Compensation (Basis Points) 2.3 0.9 1.55 1.62 

Operating Budget 

Estimated 2011 Total Compensation Costs 

($ millions) 

The Investment Division’s 2011 operating budget (excluding compensation) is $7.36 million 

(this operating budget is subject to change prior to its final approval in late 2010). This 

operating budget reflects an increase of $0.71 million, or 10.7% percent, from the 2010 

budget and, as a percentage of assets, is 1.01 basis points as compared to 0.96 basis 

points in 2010, or a 5% increase. 

Operating Budget less Total Compensation 

($ millions) 

Total 

Internal External Invest. 

Mgmt. Mgmt. Division 

2010 Operating Budget 4.25 2.40 6.65 

2011 Operating Budget 4.54 2.82 7.36 

Percent Change 6.7% 17.5% 10.6% 

Percent of Total 61.7% 38.3% 100.0% 

Average Assets ($ billions) 35.31 37.66 72.96 

Operating Budget (Basis Points) 1.29 0.75 1.01 

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Management Cost 

The expected annual external management fees by asset class for the Investment Division 

are in the table below. The estimate of fees is based on the 2011 projected average 

market value for the Defined Benefit and Health Care Funds, as shown by sub-asset class 

in the average assets column below. 

Estimate of External and Internal Management Costs 

Total for 2011 

External Management Internal Management 

Average Annual Annual Average Annual Annual 

Assets Cost Cost Assets Cost Cost 

($ millions) ($ millions) (bps) ($ millions) ($ millions) (bps) 

Public Equity 24,408 79.1 32.4 16,473 6.8 4.1 

U.S. Equity 4,881 29.3 60.0 15,973 6.0 4.4 

Non-U.S. Equity 19,528 49.8 25.5 500 0.8 2.1 

Public Fixed Income 3,991 15.7 39.4 15,343 4.8 3.1 

Core Fixed 100 0.4 35.0 11,634 4.2 3.6 

Long Bonds 0 NA NA 1,824 0.3 1.4 

TIPS 0 NA NA 425 0.1 2.1 

High Yield 3,284 12.6 38.5 0 NA NA 

Emerging Mkt Debt 607 2.7 45.0 0 NA NA 

Liquidity 0 NA NA 1,459 0.2 1.4 

Alternatives 11,000 196.8 178.9 1,745 1.0 5.7 

Private Equity 3,947 95.1 241.0 NA NA NA 

Real Estate 5,711 74.8 131.0 NA NA NA 

REIT 0 NA NA 729 0.7 10.2 

Hedge Funds 1,343 26.9 200.0 NA NA NA 

Opportunistic NA NA NA 895 0.1 1.4 

Commodities NA NA NA 121 0.1 10.0 

Total 39,399 291.6 74.0 33,562 12.6 3.7 

Custody and Overhead 1.4 2.9 

Internal Cost Allocation 6.0 NA 

Total Fund 39,399 298.1 75.7 33,562 15.5 4.6 

There is a significant cost advantage of internal management versus external management. 

Within U.S. Equity, the proportion of passive assets contributes to the lower internal 

management costs, reducing them by more than half over what they would be for active 

assets. Another source of cost savings is that it is less costly to manage assets internally 

(i.e. lower salaries and incentives, lower rent, less travel, no marketing costs, no standalone 

business expenses and no profit margin). 

Page 10



Total Costs 

The total costs of the investment program in 2011 are projected to increase by 

approximately $96 million to $313.58 million, or 43.0 basis points of assets under 

management. This compares to 31.2 basis points as shown in the 2010 Annual Investment 

Plan. The increase reflects the growing allocations to externally managed areas such as 

private equity, real estate, U.S. equity mid-cap and 130/30 strategies, hedge funds, and 

non-U.S. equity active managers. 

Total 

Internal External Invest. % of 

Mgmt. Mgmt. Division Total 

Total Compensation 8.11 3.21 11.32 3.6% 

Operating Budget less Compensation 4.54 2.82 7.36 2.3% 

Manager Fees 291.58 291.58 92.7% 

Custody and Overhead 4.34 1.4% 

Total Costs 12.65 297.61 314.60 100.0% 

Percent of Total 4.0% 94.6% 

Average 2011 Asset Size ($ billions) 35.31 37.66 72.96 

Costs in Basis Points 3.6 79.0 NA 

Costs in Basis Points to Total Fund 1.7 40.8 43.1 

Page 11 

Estimated 2011 Total Costs 

($ millions) 

In 2009 (the latest year for which figures are available), OPERS actual cost of 30.4 basis 

points was below the CEM benchmark cost of 35.1 basis points. CEM Benchmarking, Inc. 

is an independent benchmarking firm for pension plans and provides an assessment of 

OPERS investment operations relative to a global set of peers.



Peer Group Comparison 

The following chart compares the OPERS asset base and staffing to its peer group as of 

June 30, 2010. 

The chart above suggests that the Investment Division staffing level is relatively low 

compared to its asset base, particularly given the extent of internal management of assets. 

The focus of the management team continues to be on effectively increasing productivity 

and improving results without significantly increasing staff size, except when new 

responsibilities, investment strategies or sub-asset classes are added. 

The following table lists the public pension peer group referenced in the chart. 

Peers 

Public Plan Peer Group (as of 6/30/2010) 

Assets 

($ millions) 

California Public Employees' Retirement System $199,966 272 

California State Teachers' Retirement System $129,773 106 

State Board of Administration of Florida $109,344 82 

New York State Teachers' Retirement System $76,542 65 

State of Wisconsin Investment Board $74,444 124 

Washington State Investment Board $71,878 80 

New Jersey Division of Investment $66,851 67 

Ohio Public Employees Retirement System $65,937 50 

North Carolina Retirement System $65,253 24 

Ohio State Teachers Retirement System $56,891 109 

Oregon Public Employees' Retirement Fund $50,863 20 

Employees Retirement System of Georgia $13,604 46 

Page 12 


Staff



Risk Management 

OPERS is committed ―to provide secure retirement benefits to our members‖ and believes 

that an effective and integrated investment risk management program is a fundamental part 

of that mission. 

Just as risk is an inseparable and essential part of investing, OPERS views risk 

management as an integral part of investment management. OPERS Investments group 

strives to develop and uphold a ―risk-conscious culture‖ where risk owners and the 

responsibility to manage risk exist at every level of the investment organization. The 

reason for this is that risk management is believed to be most effective when it is 

incorporated throughout the decision making process - not just after the fact. 

Risk management is not risk elimination. OPERS views effective risk management as a 

dynamic process of identifying, assessing and prioritizing exposures, developing and 

implementing policies, programs and procedures to control, manage or mitigate risks, as 

well as monitoring and reporting of risks and activities. To be most successful, the risk 

management process must continually evolve and adapt to meet the changing environment 

and organizational needs. 

Objectives 

OPERS seeks to enhance risk-adjusted returns – either through reducing losses or costs, 

minimizing the possibility of losses, or enhancing returns, and to ensure the prudent 

management of investment-related risks in accordance with OPERS policies and industry 

best-practices. The two components include (1) the proactive effort to maximize risk 

adjusted returns and minimize losses and (2) due diligence, risk governance or associated 

―prudent investor‖ activities which should be part of any investment management operation. 

Approach 

Many approaches and organizational models can be employed to effectively manage 

investment risk. OPERS’ approach is part of a continual, evolutionary process toward 

perceived best practice, and focuses on the adequacy of people, process and structure. 

OPERS is focusing on the development of a dedicated, fund-level risk oversight function 

(without involvement in the direct management of assets). This alignment provides: 

A targeted business group with reduced conflicts of interest relating to asset 

management; 

An additional, discrete layer of risk control; 

Improved transparency and focus on risk management; 

A separate channel for escalation of risk issues. 

OPERS’ internal risk management approach is further supplemented by Investment 

Compliance, Internal Audit, independent auditors, advisors and consultants to form a 

comprehensive ―governance, risk, and compliance‖ framework. 

Page 13



Expected Asset Growth 

FUND STRATEGIES 


The table below summarizes Staff’s estimate (base case) of market value and ranges for 

the Defined Benefit Fund at December 31, 2011. Pessimistic and optimistic cases are also 

provided for comparison purposes. 


2011 Expected Asset Growth 

Estimated Market Values, Returns and Cash Flows 

Pessimistic Base Optimistic 

Case Case Case 

12/31/10 Market Value ($ billions) $60.1 $60.1 $60.1 

Expected Total Return -10.4% 6.3% 28.1% 

Expected Investment Gain ($ billions) -$6.2 $3.8 $16.9 

Expected Cash Flow ($ billions) -$2.4 -$2.4 -$2.4 


The anticipated market value of $60.1 billion for December 31, 2010 is derived by a 

smoothing projection. 

Asset Allocation 

The 2011 target asset allocation and ranges for the Defined Benefit Fund reflect an 

estimate by Staff of the progress made towards the long-term asset allocation targets. Also 

included are asset allocations for a comparable peer group as of June 30, 2010. 

12/31/2010 12/31/11 Peer 

Asset Class 

Estimated Target Range Group* 

Public Equity 58.5% 53.9% 40% to 60% 52.4% 

U.S. Equity 33.5% 24.9% Mkt. Wgt. ± 5% 32.8% 

Non-U.S. Equity 25.0% 29.0% Mkt. Wgt. ± 5% 19.6% 

Public Fixed Income 25.0% 25.0% 15% to 32% 30.9% 

Core Fixed 12.0% 18.0% 12% to 24% 27.2% 

Long Bonds 6.0% 0.0% 6% to 12% NA 

High Yield 5.0% 5.0% 2% to 8% 2.7% 

Liquidity 2.0% 2.0% 0% to 4% 1.0% 

Alternatives 16.5% 21.1% 8% to 30% 16.7% 

Private Equity 5.6% 7.1% 0% to 14% 8.6% 

Real Estate 8.8% 10.0% 0% to 14% 6.4% 

Hedge Funds 1.3% 2.4% 0% to 5% 1.7% 

Opportunistic 0.8% 1.6% 0% to 3% NA 

Total Defined Benefit Fund 100.0% 100.0% 100.0% 

*The asset allocations are derived from the organizations in the Peer Group Comparison section on page 11. 

Page 14



Schedule of Expected Performance and Volatility 

Active Return Active Return Target Tracking 

Average Performance Performance Tracking Error Target 

Allocation Objectives Contribution Error Range Information 

(%) (bps) (bps) (bps) (bps) Ratio 

U.S. Equity 29.1% 20 5 50 0 - 100 0.40 

Non-U.S. Equity 27.0% 54 15 135 0 - 300 0.40 

Public Fixed Income 25.0% 20 5 50 0 - 200 0.40 

Alternatives 18.9% 77 15 NA NA NA 

Total DB Fund 100.0% NA 40 100 0 - 300* 0.40 

* The tracking error range for the Defined Benefit Fund is based on Public Markets assets. 

The above table shows an anticipated active management contribution of 40 basis points to 

the Fund’s return. The estimated tracking error of 100 basis points indicates a 68% 

probability that the active return will be in a range of -60 basis points to +140 basis points. 

This interval is calculated by subtracting the tracking error from, and adding the tracking 

error to, the expected active return. The expected contribution to fund performance is 40 

basis points for 2011 which compares to the 33 basis point target for 2010. 

The figures shown in the table above are aggregated from the component portfolios in each 

of the asset classes. The tracking error that results at the fund level is lower than would be 

suggested by a simple weighted average due to the diversifying effects of the active return 

interaction among the managers and the asset classes. 

Page 15



Return and Risk 

The Defined Benefit Fund’s performance objective is to earn a long-term rate of return that 

exceeds the return of the Defined Benefit Fund policy benchmark within an appropriately 

constrained risk framework. The following table shows expected returns and return ranges 

for 2011. These are the beta, or market returns, expected from each asset class, without 

regard to outperformance or underperformance relative to the benchmarks. 

2011 Policy Return Assumptions 

Asset Classes Pessimistic Base Optimistic 

Public Equity -12.2% 8.2% 32.8% 

U.S. Equity -12.3% 8.1% 32.2% 

Non-U.S. Equity -12.0% 8.4% 33.7% 

Public Fixed Income -4.2% 0.3% 11.6% 

Core Fixed -3.9% -1.3% 9.4% 

High Yield -4.7% 6.2% 18.5% 

Liquidity 0.1% 0.3% 0.3% 

Alternatives -13.1% 8.4% 35.9% 

Private Equity -18.2% 9.2% 45.8% 

Real Estate -11.3% 8.2% 32.0% 

Hedge Funds -7.8% 7.4% 26.7% 

Opportunistic -7.8% 7.4% 26.7% 

Total Return -10.4% 6.3% 28.1% 

The return estimates in the table below were derived from the asset class return 

expectations developed by Mercer. The single-point estimate return of 6.68% is comprised 

of an expected return of 6.28% from the policy mix and an additional contribution of 0.40% 

from active management net of fees. 

2011 Total Return Assumptions 

Sources of Return Pessimistic Base Optimistic 

Policy -10.36% 6.28% 28.08% 

Tactical -0.50% 0.00% 0.50% 

Active -0.60% 0.40% 1.40% 

Total Return -11.46% 6.68% 29.97% 

2011 Total Risk and Risk for Return Assumptions 

Sources of Variability Information Sharpe 

Risk Risk Ratio Ratio 

Policy 10.50% 0.61 

Tactical 0.50% 

Active 1.00% 0.40 

Total Risk 11.20% 0.57 

Staff divides risk and return into three components as described below: 

Policy: The risk and return derived from the target policy asset allocation and the 

historical risk and return characteristics of the underlying asset classes. 

Tactical: The return and risk introduced by deviations from the policy asset mix. 

Active: The return and risk introduced by active management (security selection). 

Page 16





The table below summarizes Staff’s estimate (base case) of market value and ranges for 

the Health Care Fund at December 31, 2011. Pessimistic and optimistic cases are also 

provided for comparison purposes. 


2011 Expected Asset Growth 

Estimated Market Values, Returns and Cash Flows 

Pessimistic Base Optimistic 

Case Case Case 


Expected Total Return -9.0% 5.5% 24.9% 

Expected Investment Gain ($ billions) -$1.1 $0.7 $3.0 

Expected Cash Flow ($ billions) -$0.7 -$0.7 -$0.7 


The anticipated market value of $12.2 billion for December 31, 2010 is derived by a 

smoothing projection. 


The 2011 target asset allocation and ranges for the Health Care Fund reflect Staff’s 

estimate of the progress that will be made towards the long-term asset allocation targets, 

which are shown below. 

12/31/2010 12/31/11 

Asset Class 

Estimated Target Range 

Public Equity 56.5% 54.8% 44% to 66% 

U.S. Equity 29.0% 22.9% Mkt. Wgt. ± 5% 

Non-U.S. Equity 27.5% 31.9% Mkt. Wgt. ± 5% 

Public Fixed Income 34.0% 34.0% 24% to 44% 

Core Fixed 21.5% 21.5% 15% to 28% 

TIPS 3.5% 3.5% 2% to 5% 

High Yield 2.0% 2.0% 0% to 4% 

Emerging Mkt Debt 5.0% 5.0% 1% to 9% 

Liquidity 2.0% 2.0% 0% to 4% 

Alternatives 9.5% 11.2% 2% to 14% 

Private Equity 0.2% 0.2% 0% to 2% 

REIT 6.0% 6.0% 2% to 10% 

Hedge Funds 1.4% 2.4% 0% to 5% 

Opportunistic 0.9% 1.6% 0% to 3% 

Commodities 1.0% 1.0% 0% to 2% 

Total Health Care Fund 100.0% 100.0% 

Unlike the Defined Benefit Fund, there is no peer universe of comparable large public 

pension plans that have dedicated health care funds. 

Page 17




Active Return Active Return Target Tracking 

Average Performance Performance Tracking Error Target 

Allocation Objectives Contribution Error Range Information 

(%) (bps) (bps) (bps) (bps) Ratio 

U.S. Equity 26.0% 20 5 50 0 - 100 0.40 

Non-U.S. Equity 29.7% 54 16 135 0 - 300 0.40 

Public Fixed Income 34.0% 20 7 50 0 - 200 0.40 

Alternatives 10.3% 82 8 NA NA NA 

Total HC Fund 100.0% NA 36 90 0 - 300* 0.40 

* The tracking error range for the Health Care Fund is based on Public Markets assets. 

The above table shows an anticipated active management contribution of 36 basis points to 

the fund’s return. The estimated tracking error of 90 basis points indicates a 68% 

probability that the active return will be in a range of -54 basis points to +126 basis points. 

This interval is calculated by subtracting the tracking error from, and adding the tracking 

error to, the expected active return. The expected contribution to fund performance of 36 

basis points for 2011 is slightly lower than the 39 basis points target for 2010 primarily due 

to a lower performance objective for the Non-U.S. Equity asset class. 

The figures shown in the table above are aggregated from the component portfolios in each 

of the asset classes. The tracking error that results at the fund level is lower than would be 

suggested by a simple weighted average due to the diversifying effects of the active return 

interaction among the managers and the asset classes. 

Page 18



Return and Risk 

The Health Care Fund’s performance objective is to earn a long-term rate of return that 

exceeds the return of the Health Care Fund policy benchmark within an appropriately 

constrained risk framework. The following table shows expected returns and return ranges 

for 2011. These are the beta, or market returns, expected from each asset class, without 

regard to outperformance or underperformance relative to the benchmarks. 

2011 Policy Return Assumptions 

Asset Classes Pessimistic Base Optimistic 

Public Equity -12.2% 8.2% 32.9% 

U.S. Equity -12.3% 8.1% 32.2% 

Non-U.S. Equity -12.0% 8.4% 33.7% 

Public Fixed Income -4.2% 0.5% 11.4% 

Core Fixed -3.9% -1.3% 9.4% 

TIPS -1.8% 0.4% 8.2% 

High Yield -4.7% 6.2% 18.5% 

Emerging Mkt Debt -8.8% 6.3% 24.1% 

Liquidity 0.1% 0.3% 0.3% 

Alternatives -8.2% 6.9% 25.4% 

REIT -7.4% 7.1% 24.3% 

Hedge Funds -7.8% 7.4% 26.7% 

Opportunistic -7.8% 7.4% 26.7% 

Commodities -12.2% 3.4% 24.1% 

Total Return -9.0% 5.5% 24.8% 

The return estimates in the table below were derived from the asset class return 

expectations developed by Mercer. The single-point estimate return of 5.84% is comprised 

of an expected return of 5.48% from the policy mix and an additional contribution of 0.36% 

from active management net of fees. 

2011 Total Return Assumptions 

Sources of Return Pessimistic Base Optimistic 

Policy -9.05% 5.48% 24.85% 

Tactical -0.50% 0.00% 0.50% 

Active -0.54% 0.36% 1.26% 

Total Return -10.08% 5.84% 26.61% 

2011 Total Risk and Risk Attribution Assumptions 

Sources of Variability Information Sharpe 

Risk Risk Ratio Ratio 

Policy 8.50% 0.64 

Tactical 0.50% 

Active 0.90% 0.40 

Total Risk 9.10% 0.61 

Due to rounding, the total return may not appear to sum from the sources of return. 

Variability risk is measured by standard deviation for policy and total risk and by tracking 

error is used for active risk. 

Page 19




Defined Contribution Fund 

Since its inception on January 2, 2003 the Defined Contribution Fund’s assets have grown 

to $393 million. For the year through August 31, asset growth has been $33 million. 

Future growth of the Defined Contribution Fund assets is expected to be slightly above 

historical averages due to the addition of nearly 2,000 new participants each year. 

The following table shows the distribution of assets across the various OPERS investment 

options within the Defined Contribution Fund as of August 31, 2010. 

OPERS Investment Options 

Defined Contribution Fund Assets 

Total for 2011 

Assets Under 

Management 

($ millions) 

Page 20 

Estimated 

Annual Fees 

($ millions) 

Estimated 

Annual Fees 

(bps) 

Core Funds 

OPERS Stable Value Fund $37.6 $0.06 23 

OPERS Bond Index Fund $24.4 $0.03 4 

OPERS Stock Index Fund $34.9 $0.04 3 

OPERS Large Cap Index Fund $26.3 $0.03 5 

OPERS Small Cap Index Fund $22.8 $0.03 8 

OPERS Non-U.S. Stock Index Fund $27.8 $0.04 10 

Target Date Funds 

OPERS Target Payout Fund $8.8 $0.02 10 

OPERS Target 2015 Fund $16.4 $0.02 7 









Total $434.7 $0.57 13 


The target asset allocation and ranges for the Target Date Funds can be found in the 

Defined Contribution Fund Policy. Target asset allocations for the Target Date Funds 

migrate over time with the mix between equity-oriented allocations and fixed incomeoriented 

allocations becoming more conservative as the target date approaches the 

retirement date. 

The OPERS Target Date Funds were introduced on October 1, 2008. In December 2010, 

the OPERS Investment Options, including the Target Date Funds, will become primarily 

passive with the exception of the Stable Value Fund. Additionally, as part of normal 

progression, the OPERS Target 2010 Fund will transition into the OPERS Target Payout 

Fund. The asset allocation for several of the Target Date Funds will include TIPS and Long 

Duration as of December 2010 to improve risk-adjusted return expectations and enhance 

diversification.



Moving the Core Funds and Target Date Funds to primarily passive management provides 

less active risk and lower fees. However, transitioning completely to passive management 

constrains DC participants who want active investment options. During the first quarter of 

2011, a self-directed mutual fund brokerage account will be available to the DC Plan 

participant in an effort to broaden the amount of active management available to interested 

participants. 

The self-directed brokerage account will include the following protective parameters: 

Only designated mutual funds can be purchased through the window, 

Maximum of 50% of the member’s portfolio is allowed to be invested though the 

brokerage window though the Plan will not rebalance the brokerage investments 

should they grow to exceed 50% of participants assets. 

An account minimum of $5,000 is required before a participant can use the window. 

The annual cost of the window is borne by the participant using the window. 

Return, Risk and Benchmark 

Mercer Investment Consulting provided the asset class return expectations listed in the 

table below based on their capital markets modeling assumptions. Those assumptions 

reflect forward looking total returns, fundamental data and valuation levels. The Investment 

Staff does attempts to mitigate tactical risk by rebalancing the OPERS Investment Options 

quarterly when the allocations are outside their respective policy ranges. The returns listed 

below are neither predictions of, nor guarantees for, future performance. 


Average 

Assets Under 

Management 

($ millions) Benchmark 

Page 21 

Return 

(%) 

Risk* 

(%) 

Performance 

Objectives 

(bps) 

Target 

Tracking 

Error 

(bps) 

Target 

Information 

Ratio 

Core Funds 

OPERS Stable Value Fund $37.6 Custom SV** 3.70% 3.00% 10 NA NA 

OPERS Bond Index Fund $24.4 Barclays Aggregate 4.10% 6.00% 0 25 0.00 

OPERS Stock Index Fund $34.9 Russell 3000 8.00% 20.80% 30 70 0.43 

OPERS Large Cap Index Fund $26.3 Russell 1000 7.90% 20.00% 0 15 0.00 

OPERS Small Cap Index Fund $22.8 Russell 2000 8.20% 24.30% 0 25 0.00 

OPERS Non-U.S. Stock Index Fund $27.8 MSCI ACWI ex-US 8.30% 20.90% 0 75 0.00 

Target Date Funds 

OPERS Target Payout Fund $8.8 Custom Payout*** 5.65% 6.62% 6.1% NA NA 

OPERS Target 2015 Fund $16.4 Custom 2015*** 6.51% 9.67% 7.4% NA NA 









* Risk is defined in this table as the forward-looking annualized standard deviation of returns. 

** The Custom Stable Value Index is comprised of the following weights: 5% Merrill Lynch 3-Month Treasury 

Bills, 45% Barclays 1-5 Year Government/Corporate Bond, 35% Barclays Intermediate 

Government/Corporate and 15% Barclays Aggregate; smoothed over three year periods. 

*** The custom indices for the Target Date Funds are weighted based on the benchmarks of the respective 

OPERS Target Date Fund target allocations.



ASSET CLASS STRATEGIES 

Tactical Outlook 

The following tactical outlook provides a background and context for the asset class 

strategies for both the Defined Benefit and Health Care Funds. 

The following are overviews of the two components of the tactical outlook: the economic 

outlook and the investment outlook. The economic outlook summary was provided by the 

Board’s general investment advisor, Mercer Investment Consulting, in November, 2010. A 

comprehensive economic outlook from Mercer is included as Appendix A. The investment 

outlook below is provided by OPERS’ Investment Staff and summarized by asset class. 

Economic Outlook 

Continued subdued growth in developed economies and average growth in emerging 

markets. 

Low inflation to continue into 2011. 

Efforts to fight deflation are modestly successful, producing low inflation in 2011. 

The downside of Quantitative Easing (QE) is a continued steep yield curve, as the 

market fears rising inflation in the middle of the decade. 

The Federal Reserve is not expected to raise interest rates until mid to late 2011. 

Unemployment rate starts to gradually fall. 

Investment Outlook 

Information gathered from a variety of sources was used to determine the investment 

outlook for 2011. Information considered includes Mercer’s outlook, research from 

investment banks, discussions with and research by external investment managers, 

feedback from asset class advisors, discussions with peers and industry experts and 

academic and informational periodicals. 

U.S. Equity Outlook 

We expected strong performance in the first half of 2010, but were uncertain on how the 

medication provided to the economy via fiscal and monetary stimulus would affect the 

balance of 2010. The S&P 500 appreciated into April 2010, but was ultimately bogged 

down by a lack of understanding by investors of the government forces at work both 

domestically, as well as abroad and the uncertainty surrounding their effectiveness. 

Currently, investors fear the unknown as the Federal Reserve embarks on another 

round of QE. Investment banks’ ―Buy‖ ratings are at their lowest levels in many years, 

confidence continues to show a relatively anemic and shaky improvement pattern, and 

downward revisions or negative preannouncements in front of the third quarter earnings 

per share season were very high relative to the last several quarters, and for stock 

investors is considered good news. 

Page 22



With all the constant bearishness, it might be helpful to explain why the S&P 500 is at its 

current price level. For the most part, the S&P 500 has an extremely low multiple 

because investors have difficulty projecting S&P 500 earnings over the next 3 years 

since there is a large range of potential outcomes. Consequently, investors are not 

willing to assign a full valuation multiple. 

A question for 2011 is: ―Are there events on the horizon which can reduce the level of 

potential outcomes and thereby narrow the range of earnings per share possibilities for 

the S&P 500?‖ In the short-term, the answer is yes. In the long-term, it is not as clear, 

leaving us practically with a similar outlook that we had at this time last year. 

In the short term, the ―cancel-replace‖ scenario from the U.S. election results is actually 

a positive for the stock market. It is positive because it is unlikely that much legislation, 

―change‖, as has been passed in the last two years will occur. Consequently, investors 

have to tighten their expectations for S&P 500 earnings in the forward three years as 

the uncertainty surrounding legislation will be reduced. In addition, the Federal Reserve 

has made it as clear that they will maintain an accommodative monetary policy. Also, 

the Obama administration may take a more business-friendly stance and therefore, you 

have both monetary and fiscal stimulus in an accommodative stance. 

Despite all the bad news and concerns, we believe the U.S. equity market will trend 

higher in 2011 and advance over 10%. 

Non-U.S. Equity Outlook 

Despite the best efforts of central banks, developed economies continue to grow below 

historical levels. Developed nations also continue to face headwinds from excessive 

budget deficits, growing debt levels, reduced consumer spending and aging 

populations. 

Emerging countries are generally better positioned for growth due to their modest levels 

of government and consumer debt, combined with a younger and growing consumer 

culture. In addition, the dependence of those markets on exports for economic growth 

is moderating. 

Globally, monetary policy remains accommodative in all major regions, corporate 

balance sheets are flush with cash, earnings are growing and there is increasing global 

political gridlock leading to reduced political risk aversion. All these factors should be 

beneficial to equities. 

U.S. dollar weakness continues, driven by low interest rates and continued fiscal and 

monetary measures to stimulate the economy. 

Given this outlook, the OPERS Non-U.S. Equity portfolio is overweight emerging 

markets and remains unhedged versus the U.S. dollar. 

Fixed Income Outlook 

Our base case scenario for 2011 calls for moderate economic growth in the 1to 3 

percent range, a slowly falling unemployment rate and a bottoming of inflation 

Page 23



expectations. As a result, the Federal Reserve will most likely maintain a zero interest 

rate policy longer than they normally would during a cyclical economic recovery, which 

could keep monetary tightening at bay for at least half of 2011 and quite possibly for 

most of the calendar year. Of course, this policy could be reversed if economic growth 

surprises to the upside during the year. Given this backdrop, interest rates are 

expected to stay low until it is clear the economy can grow without substantial fiscal or 

monetary policy assistance and could begin to trend upwards as early as the second 

quarter but more likely in the second half of the year. The yield curve will then most 

likely exhibit a bearish steepener with the long end of the curve trading off initially and 

then the front end of the curve following suit as the Federal Reserve makes clear its QE 

exit strategy. 

TIPS will offer downside protection relative to nominal treasuries once rates begin to 

rise and inflation expectations begin to creep back into the market. 

Investment grade credit should benefit from low, range bound interest rates early in the 

year and then narrow in spread to U.S. treasuries securities if rates rise, particularly if 

the economy recovers more quickly than anticipated. Risks include debt financed M&A 

and share buybacks. 

Government intervention will dictate the performance of Agency Mortgage Backed 

Securities. It will be mildly positive if the Federal Reserve includes it in future QE 

initiatives but overwhelmingly negative if the government indiscriminately sponsors a 

mortgage refinance wave so a tactical underweight is warranted to start the year. 

Another year of shrinking supply in securitized product should benefit that sector relative 

to U.S. treasuries in 2011 although expectations of losses have already fallen 

significantly in 2010 reducing their potential outperformance for the coming year. 

Private Equity Outlook 

New investment activity should gradually increase as credit markets continue to improve 

and the business environment becomes less volatile, but the scale of investment activity 

should remain below the peak levels of 2006 to 2007. 

Exit activity should broadly increase as potential buyers become more confident in their 

own stability and as they obtain greater visibility into a target company’s future 

performance expectations. 

The secondary market should experience increased transaction volume driven by a 

structural shift in investor’s preference for liquidity and by sellers needing to rebalance 

their portfolios for regulatory and strategic reasons. 

Distressed and other credit related strategies are considered interesting investment 

opportunities as the pace of the deleveraging/restructuring of corporate balance sheets 

increases. 

Valuations for quality companies will continue to remain high, buoyed by credit-starved 

investors reaching for yield. 

Page 24



Real Estate Outlook 

Real estate fundamentals will improve in 2011 because of the expected growth in GDP 

and the limited property development pipeline. 

Transaction volume will continue to increase in the coming year due to aggressive 

bidding by potential buyers. 

Capitalization rates will remain low and asset pricing will remain aggressive as long as 

the low interest rate environment persists. 

Page 25



Public Equity 

In 2011, a key objective for the Public Equity allocation is to reallocate toward a global 

equity exposure. The Public Equity allocation’s structure will be transitioned from an equal 

weight of U.S. Equity and Non-U.S. Equity to a global market weighting. The target weights 

will be determined quarterly based on the MSCI All Country World Index - Investable 

Market Index (MSCI ACWI-IMI) U.S. versus Non-U.S. weights. The index weight at the end 

of November 2010 was 43% U.S. Equity and 57% Non-U.S. Equity. 

As shown in the following table, the benchmark for the U.S. Equity asset class is the 

Russell 3000 and the performance objective is to outperform by 20 basis points, net of 

fees. The tracking error target is 50 basis points with a range of 0 to 100 basis points. The 

benchmark for the Non-U.S. Equity asset class is the All Country World excluding the 

United States - Investable Market Index (MSCI ACWIxU.S.- IMI), unhedged, and net of 

dividends. The performance objective is to outperform by 54 basis points, net of fees, with 

a target tracking error of 135 basis points with a range of 0 to 300 basis points. During 

2011, the Non-U.S. Equity benchmark will be transitioning to 65% MSCI World Index 

excluding the United States - Investable Market Index and 35% MSCI Emerging Markets. 

Public Equity 

Expected Performance and Tracking Error 

Performance Target 

Objectives Tracking Target 

(net of fees) Error Information 

Benchmark (bps) (bps) Ratio 

U.S. Equity Russell 3000 20 50 0.40 

Non-U.S. Equity MSCI ACWI-xUS-IMI 54 135 0.40 

Staff is seeking to increase the proportion of active management during 2011 in Public 

Equity with a commensurate increase in the target tracking error with the goal of achieving 

higher levels of alpha. To accomplish this, new managers are being sourced in areas such 

as U.S. and Non-U.S. small cap active, Non-U.S. Core, U.S. mid-cap active and 130/30 

U.S. equity, which will be allocated to external managers and one internal portfolio. 

The U.S. Equity assets are planned to be allocated to managers employing various 

strategies including index, enhanced index, active, quantitative, options-based and 130/30 

(long-short). U.S. Equity managers are assigned various domestic equity-oriented 

benchmarks including the Russell 200 (mega-cap), Russell 1000 (large-cap), Russell 800 

(mid-cap), or Russell 2000 (small-cap). The mega-cap (greater than $10 billion) space in 

the U.S. Equity market is highly efficient and will largely be indexed while active 

management will predominantly be used in the mid and small-cap areas. 

The structure of the Non-U.S. Equity allocation will be transitioned in 2011 from 

benchmark-weighted allocations to MSCI developed international markets (EAFE –Europe, 

Australasia, Far East) and Emerging Markets to a structure that overweights Emerging 

Markets and has an allocation to developed Non-U.S. equity small-cap markets. 

The use of derivatives is also employed as a cost-effective, flexible, operationally efficient 

and expeditious way to manage exposures in both the U.S. Equity and Non-U.S. Equity 

asset classes. 

Page 26



Public Fixed Income 

The objective for the Public Fixed Income asset class is obtain global fixed income 

exposure with allocations to the following sub-asset classes. 

The Core Fixed allocation is benchmarked to the Barclays Aggregate Index and 

provides broad-based exposure to fixed income assets including treasury securities, 

corporate bonds, agency bonds and structured securities. Internal management is used 

for the majority of this exposure. 

The High Yield allocation is benchmarked to the Barclays High Yield Index and provides 

exposure to corporate non-investment grade bonds. External managers are employed 

to manage the high yield exposure. 

The Treasury Inflation Protected Securities (TIPS) portfolio is benchmarked to the 

Barclays TIPS Index and is managed internally. 

Emerging Market Debt portfolios provide exposure to international emerging market 

bonds and is currently managed utilizing two external managers. 

The Liquidity Funds, managed internally, are to provide liquidity during periods when the 

ability to liquidate other asset classes are constrained or too costly. 

Public Fixed Income 






Core Fixed Barclays Agg 30 75 0.40 

Long Bonds Barclays Long G/C 40 100 0.40 

High Yield Barclays HY 100 250 0.40 

Liquidity 3-Month T-Bill 0 0 NA 

TIPS Barclays TIPS 30 75 0.40 

Emerging Market Debt Custom* 140 350 0.40 

* 50/50 mix of the JP Morgan EM Bond Index Global & the JP Morgan Govt Bond 

Index-Emerging Markets Global Diversified 

The Defined Benefit and Health Care Funds each have allocations designed to meet their 

long-term obligations and have allocations to the above fixed income security types. See 

page 15 for the Defined Benefit Fund allocation and page 18 for the Health Care Fund 

allocations. 

Securities Lending 

The securities lending program uses a combination of lending agents to maximize lending 

revenue. OPERS uses agents who provide competitive fee splits, while providing adequate 

risk controls and expertise in the asset class being loaned. There is a bias toward lending 

assets in an auction environment so that borrowers are providing maximum revenue in a 

competitive environment on a regular basis. In 2011, Staff plans to begin lending the 

Treasury and Agency assets in-house. This change will increase revenue and necessitate 

the addition of another internal resource to assist with that process. The collateral from the 

securities lending program is managed internally. The combined lending revenue and 

investment income comprise the total securities lending performance. 

Page 27



Cash Management 

The cash portfolios are managed with a low-to-moderate risk profile that results in principal 

preservation, while exceeding the performance of the respective benchmarks. The 

benchmark of the OPERS Short Term Investment Funds (STIF) is the 91-day Treasury bill. 

The benchmark for the Securities Lending STIF is the Fed Funds Open Rate. Each 

portfolio is run separately, with Staff targeting assets that are most likely to generate 

performance above the respective portfolio benchmarks. Staff is currently considering new 

guidelines and a new structure for the cash portfolios that would allow greater focus on the 

management of liquidity in this asset class. The general structure will incorporate new 

liquidity buckets that will be unitized for purchase by the individual cash portfolios. 

Page 28



Alternatives 

The Alternatives asset class is composed of private equity, real estate, hedge funds, 

infrastructure and commodities investment strategies. The Defined Benefit and Health 

Care Funds invest differently in the Alternatives asset class to meet their unique investment 

objectives. The Defined Contribution Fund does not have an allocation to Alternatives 

The following table summarizes the benchmark, performance objectives and tracking error 

for the various alternative investment strategies utilized within the Fund. 

Private Equity 

Alternatives 






Private Equity Russell 3000 + 3% 100 NA NA 

Real Estate NPI 50 NA NA 

Hedge Funds LIBOR + 4%* 50 NA NA 

Opportunistic Custom** 200 NA NA 

REIT DJ RESI 80 200 0.40 

* With a minimum return of 7% 

** Market cap weighted average of underlying investments 

The current investing environment for most large sophisticated investors today is 

constrained by the excesses of 2006-2008 commitment period which typically resulted in 

either an over allocation to the asset class and/or the need for investors to rebalance their 

portfolios. As a consequence, the Private Equity Staff intends to invest in secondaries, 

distressed credit strategies, and other situations. In addition, Staff intends to continue to 

invest in high quality general partners. A special focus will be given to emerging markets, 

sector-focused strategies, and small/mid market corporate finance related managers. 

Real Estate 

Core real estate properties are intended to be reduced with increases to opportunistic and 

distressed real estate equity and debt. 

The Private Market Real Estate program consists of two components; a stable (beta) 

portfolio and a high-return (alpha) portfolio. The beta portfolio is comprised of stable, 

positive cash-flowing core properties and constitutes no less than 65% of the Private 

Market Real Estate portfolio. The high-return (alpha) portfolio consists of both U.S. and 

non-U.S. Real Estate investments, such as non-core development, redevelopment or 

repositioning of all property types. 

The Health Care Fund’s exposure to real estate is obtained through investments in publicly 

traded Real Estate Investment Trusts (REITs). 

Page 29



Hedge Funds 

The Hedge Fund allocation is expected to grow from $105 million at the end of the third 

quarter of 2010, to approximately $2 billion by the end of 2011. Staff is in the final stages 

of the hiring process for new fund of hedge fund managers, which will be funded in 2011. 

We are also in the process of identifying hedge fund consultants which will begin working 

with the Board and Staff in 2011. In addition, we will focus on direct multi-strategy and 

single strategy hedge funds to bring OPERS total allocation to the $2 billion level. 

Opportunistic 

The Opportunistic allocation allows OPERS to allocate to investment strategies or employ 

instruments that do not fit within one of the traditional asset class categories. Each strategy 

will be evaluated on its own merit and whether or not the strategy is feasible and scalable. 

An internally managed Emerging Markets currency portfolio was developed and funded in 

November 2010 and will likely be expanded in 2011. The Opportunistic Debt portfolios are 

planned to be restructured to be more actively managed. 

Commodities 

The Health Care Fund’s commodity allocation of 1% was fully funded in 2010 and 

commodity exposure has also been used tactically in the Defined Benefit Fund as part of 

the Opportunistic allocation. 

Page 30


Appendix A



The Economic Prospects for 2011 

October 30, 2010 

Global Growth: Issues and Themes 

� Continued subdued growth in developed economies. Average growth in emerging 

markets. 

� Low inflation continues into 2011. 

� Efforts to fight deflation are modestly successful, producing low inflation in 2011. 

However, the downside of Quantitative Easing is a continued steep yield curve, as the 

market fears rising inflation in the middle of the decade. 

� Fed doesn’t raise interest rates until mid- to late 2011. 

� Unemployment starts to gradually fall. 

Overview 

Overall, we project another year of slightly below average economic growth across the 

globe for 2011. Developed markets, struggling to contain budget deficits and nurse still 

fragile financial sectors, will produce slightly below average growth. Emerging markets are 

stronger and should produce average growth, which for them, is above the average growth 

for developed markets. However, emerging markets will start to see strains of overheated 

and unbalanced economies. 

Inflation should be slightly below average as well, as the deflationary effects of the credit 

crunch and excess capacity are felt. 

Perhaps the major issue of 2011 will be sovereign debt globally and state and municipal 

debt locally. There is a reasonable possibility that Europe will avoid another Greek fiscal 

crisis during the year, but we are not optimistic that the problem has been resolved. 

Ireland, Portugal, Spain, and Italy face strenuous fiscal pressures that are unlikely to 

improve without a burst of global growth. 

Page 32



Summary Economic Projections for 2011, In Percent 

Overall Global Growth 

Mercer Projections IMF Survey [1] Bloomberg Survey [2] 

Region Growth Inflation Growth Inflation Growth Inflation 

US 2.6 1.5 2.6 1.4 2.4 1.5 

Eurozone 2.0 1.2 1.7 1.6 -- -- 

UK 2.3 1.5 1.7 3.1 -- -- 

Japan 2.0 0.5 2.8 -1.0 -- -- 

China -- -- 10.5 3.5 -- -- 

India -- -- 9.7 13.2 -- -- 

[1] International Monetary Fund, World Economic Outlook , October 2010 

[2] Bloomberg October 13, 2010 Survey of economic forecasts 

Global growth should return to above average levels in 2011 

Global Projected Growth Rates for 2010 and 2011 

Projected Projected Average 

Region 2007 2008 2009 2010 2011 Since 1980 

World 5.3 2.8 -0.6 4.8 4.2 3.3 

Developed 2.7 0.2 -3.2 2.7 2.2 2.5 

Emerging Markets 8.7 6.0 2.5 7.1 6.4 4.4 

Source: International Monetary Fund, World Economic Outlook , October 2010 

Projected Growth and Inflation for Selected Countries and Regions 

Economic Growth Inflation 

2010 2011 2010 2011 

US 2.6 2.3 1.4 1.0 

Europe-Euro Area 1.7 1.5 1.6 1.5 

United Kingdom 1.7 2.0 3.1 2.5 

Japan 2.8 1.5 -1.0 -0.3 

China 10.5 9.6 3.5 2.7 

India 9.7 8.4 13.2 6.7 

Developing Western Hemishere 5.7 4.0 6.1 5.8 

Asia Emerging Markets 9.4 8.4 6.1 4.2 

Central and Eastern Europe 3.7 3.1 5.2 4.1 

Russia 4.0 4.3 6.6 7.4 

Sub-Saharan Africa 5.0 5.5 7.5 7.0 

Middle East and North Africa 4.1 5.1 6.8 6.2 

World 4.8 4.2 3.7 3.1 

Source: International Monetary Fund, World Economic Outlook , October 2010 

Page 33



United States 

Although clearly improved in the last 18 months, the US economy still faces many 

headwinds. 

� The biggest impediment to a stronger recovery is the anemic housing market. Just 

about every measure of the market—housing starts, sales, inventories, foreclosures— 

shows a market with profound problems. Housing prices stopped falling in 2009, but 

have stalled in the last few months. A strong housing market is one of the hallmarks of 

post-WWII recoveries. We do not expect the housing market to improve much in 2011. 

� Restrained consumption growth. Household savings rates have increased to 6.0%, a 

reasonable level, but other measures are not encouraging. Net Worth is still well below 

the peak in 2007 and remains at 2004 levels (even worse in inflation-adjusted terms). 

The tough job market does not help consumer confidence. We expect modest 

consumption growth in 2011—around 2.0% to 2.5%. 

� Fiscal problems at the Federal, State, and local level. We worry that some states and 

municipalities face even more cut-backs and budgetary woes in 2011. 

� Continued restraint in the financial sector as it nurses back to health. 

There are strengths in the US economy. 

� Corporate sector. US corporations adjusted very quickly and rebounded back to 

profitability very quickly. They have ample cash reserves, so they could start investing 

and hiring very quickly. 

� A lower dollar could spark a round of export growth. After improving dramatically from 

2007 to 2009, the trade deficit has worsened in the last few quarters. However, the 

declining dollar and moderate growth in the emerging markets should provide a lift to 

exports in 2011. 

Mercer Projections for US Inflation and Economic Growth: 2011-2030 

Inflation 

2011 2012 2013 2014 2015 2016 to Cumulative Rates 

Probability Dec Dec Dec Dec Dec 2030 1 yr 2 yr 3 yr 5 yr 10 yr 20 yr 

Highest Inflation 10% 3.0% 4.5% 5.5% 7.5% 5.0% 3.8% 3.0% 3.7% 4.3% 5.1% 4.4% 4.1% 

Higher Inflation 20% 2.5% 3.3% 5.0% 5.0% 4.0% 3.0% 2.5% 2.9% 3.6% 4.0% 3.5% 3.2% 

Baseline 40% 1.5% 2.0% 3.0% 3.5% 3.5% 2.6% 1.5% 1.7% 2.2% 2.7% 2.6% 2.6% 

Lower Inflation 20% 0.7% 2.0% 2.0% 2.0% 2.0% 2.3% 0.7% 1.3% 1.6% 1.7% 2.0% 2.2% 

Lowest Inflation 10% -0.3% 1.0% 1.0% 1.0% 1.0% 1.8% -0.3% 0.3% 0.6% 0.7% 1.3% 1.5% 

Weighted Average 100% 1.5% 2.4% 3.3% 3.7% 3.2% 2.7% 1.5% 2.0% 2.4% 2.8% 2.7% 2.7% 

Real GDP Growth 

2011 2012 2013 2014 2015 2016 to Cumulative Rates 

Probability Dec Dec Dec Dec Dec 2030 1 yr 2 yr 3 yr 5 yr 10 yr 20 yr 

Highest Growth 10% 3.5% 4.0% 4.4% 4.4% 4.1% 3.5% 3.5% 3.7% 4.0% 4.1% 3.8% 3.6% 

Higher Growth 20% 3.0% 3.5% 3.5% 3.5% 3.5% 3.2% 3.0% 3.2% 3.3% 3.4% 3.3% 3.2% 

Baseline 35% 2.6% 2.9% 3.1% 3.3% 3.1% 2.9% 2.6% 2.7% 2.9% 3.0% 2.9% 2.9% 

Lower Growth 25% 1.0% 2.0% 2.0% 2.0% 2.2% 2.4% 1.0% 1.5% 1.7% 1.8% 2.1% 2.3% 

Lowest Growth 10% 0.0% 1.5% 1.5% 1.5% 2.0% 2.2% 0.0% 0.7% 1.0% 1.3% 1.7% 2.0% 

Weighted Average 100% 2.2% 2.8% 2.9% 3.0% 3.0% 2.9% 2.2% 2.5% 2.6% 2.8% 2.8% 2.8% 

Page 34



Europe 

The economic recovery in Europe is slow and uneven, as domestic demand in France and 

the UK remains low and peripheral countries are plagued by more structural economic 

issues. Industrialized countries in Europe are projected to grow at 1.7% in 2010 and 1.5% 

in 2011, while emerging Europe is expected to grow at 3.7% in 2010 and 3.1% in 2011. 

Forecasters are concerned with Europe’s financial sector, as the sovereign debt crisis in 

peripheral countries can trickle into the euro area. Many European banks are dependent on 

government aid, and Greece, Ireland, Portugal and Spain have to grapple with 

competitiveness issues in their economies. For these reasons, economists believe that 

there will be no immediate and widespread recovery in Europe. 

Forecasters expect 1.5% inflation in the euro area in 2011, while prices in the UK are 

predicted to grow by 2.5% in 2011. The projected unemployment for 2011 in advanced 

European countries is 9.3%, indicating that economists have little faith in job creation. In 

order to spur Europe’s economies and foster long-term growth, the IMF believes that public 

debt needs to decline significantly and EU policy must be reformed to emphasize crisis 

management and integrated supervision. The IMF also believes that regulatory reform is 

necessary, as it encourages banks to start lending again. It is important to keep in mind, 

though, that these proposed solutions will not happen quickly. 

Japan 

Japan’s economy has seen some bright spots in the global economic recovery. Its exports 

have risen as demand picked up in the US and China. Analysts also expect that Japan will 

attract investment activity. Yet issues remain, as the yen has appreciated and rendered its 

exports more expensive. The government is already unwinding its fiscal stimulus and 

Japan’s labor market remains weak. The International Monetary Fund predicts that the 

Japanese economy will grow by 2.8% in 2010 and 1.5% in 2011. 

Asia: China, India, and Emerging Markets 

Asia’s GDP growth is expected to vastly outperform its developed Western counterparts; 

the IMF forecasts Asia to grow by 7.9% in 2010 and 6.7% in 2011. The forecast for China’s 

growth in 2011 is 9.6%, while India is expected to expand by 8.4%. According to the IMF, 

Asian economies have fared well in comparison to other regions thanks to a combination of 

Page 35



expansionary monetary policy, healthy domestic consumer demand and strong capital 

inflows. Inflation expectations for Asian economies have moderated since last year; prices 

in advanced markets are projected to rise by 1.2% in 2011 while those in developing 

markets are forecast to rise 4.2%. Emerging Asia is not completely exempt from risks to 

short-term growth, though; weak demand in developed countries may negatively impact 

exports from Asia. Additionally, analysts believe that housing prices in Australia and New 

Zealand may drop, leading to a weaker market environment in the two countries. Asian 

nations are encouraged by the IMF to implement measures to boost the current economic 

recovery while also considering policies to ensure fiscal stability in the long term. Lifting 

demand domestically as opposed to relying solely on exports would also help to ensure 

longer-term growth in Asia. 

Latin America 

Similar to Asia, countries in Latin America are recovering from the global economic crisis 

better than their more developed counterparts. Analysts expect Latin America to grow at 

5.7% in 2010 and 4.0% in 2011. However, inflation is predicted to reach 6.9% in South 

America and 5.5% in the Caribbean in 2011. Prices are expected to rise 1.2% in North 

America and 4.1% in Central America in 2011. 

According to analysts, Latin America’s post-recessionary growth was encouraged by 

economic stimulus packages, low interest rates and healthy commodities exports. 

However, the IMF believes that Latin American nations should address fiscal issues, which 

will limit both inflationary and exchange rate risk. 

Middle East and North Africa 

GDP growth in the region is projected to be 4.1% in 2010 and 5.1% in 2011. The Middle 

East and North Africa (MENA) was helped by rising oil prices and successful economic 

stimulus programs. Differences between oil-exporting and oil-importing countries have 

diminished thanks to spillover effects from the former’s expansionary policies. 

Inflation remains problematic for nations in the Middle East. In 2011, inflation in Egypt is 

expected to reach 10.0%, while that of the Islamic Republic of Iran is expected to hit 8.5%. 

Page 36



However, many oil-importing countries have started to unravel their stimulus packages as 

inflation looms. 

MENA countries are encouraged by the IMF to dedicate resources toward long-term 

growth. This involves job creation, better education and more robust legal and regulatory 

frameworks. By promoting a more stable business environment, MENA can attract greater 

foreign direct investment (FDI) from Western Europe and the US, which will bring stability 

to the financial sector. 

Sub-Saharan Africa 

The GDP growth in Sub-Saharan Africa is expected to climb from 5.0% in 2010 to 5.5% in 

2011. Oil-exporting countries, like Nigeria and Angola, are expected to fare well as oil 

prices and demand for oil are projected to rise. However, inflation risks loom large as 

projected inflation among oil-exporting nations in the region is 11.3% in 2010 and 9.4% in 

2011. Sub-Saharan Africa’s current account balance is expected to shrink from -1.1% in 

2010 to -1.9% in 2011. However, employment figures are not promising for countries in this 

region; Swaziland’s projected unemployment rate in both 2010 and 2011 is 30.0%, while 

that of South Africa is 24.8% in 2010 and 24.4% in 2011. Economists also speculate that 

budget-tightening in Western countries may have an adverse impact on Africa’s economy, 

as aid and private financial inflows are diminishing. For countries that are not mired in debt, 

the International Monetary Fund recommends that the government invest in education, 

health and infrastructure to foster long-term growth. 

Fundamental Global Issues and Problems 

The global recovery which began in 2009 has had varied effects on different countries. 

Many emerging economies are benefiting from rising oil and commodity prices, as well as 

well-timed government responses to the financial crisis. Developed countries, on the other 

hand, are still suffering from decreased demand and weak labor markets. Yet the IMF 

points out that all regions in the world need to be wary of instability in the credit market, as 

the sovereign debt crisis that began in Europe has raised prospects for volatility. The 

International Monetary Fund predicts that the global economy will expand by 4.8% in 2010 

and 4.2% in 2011. To encourage further global growth, economists believe that domestic 

demand in advanced economies needs to be boosted. Additionally, many countries need to 

Page 37



strike a delicate balance between unwinding their unprecedented fiscal stimulus programs 

and encouraging short-term productive growth. 

Conclusion 

The global economy is still struggling to recover from The Great Recession of 2008 and 

2009. Low GDP growth and inflation will remain in the U.S. until mid-2011, as consumers 

and businesses remain reluctant to spend. In the short run, the prospect of higher interest 

rates remains distant, as the Federal Open Market Committee has historically raised rates 

only after unemployment has peaked. Although unemployment has declined slightly over 

the last year, it is not enough for the Fed to unleash interest rates. As in 2010, a weak 

dollar and relatively strong demand in emerging markets remain bright spots for the U.S. 

economy in 2011. 

Page 38


Appendix B




Experience 

Education/ 

Name Title OPERS Total Prior Employers/Positions Designations 

Steven Barker 

Joshua Biddinger 

Teresa Black 

John Blue 

Joseph Boushelle 

David Buchholz 

U.S. Equity 

Senior 

Investment Analyst 

Office of the CIO 

Associate 

Risk Analyst 

Fixed Income 

Cash/Securities 

Lending Analyst 

External Public 

Markets 

Senior 


U.S. Equity 


Fund Management 


Analyst 

11 11 

2 6 

11 15 

18 19 

2 8 

2 4 

United States Marine Corps 

Supply Officer 

Citigroup/BISYS Fund Services 

Supervisor, Fund Accounting 

BISYS Fund Services 

Supervisor, Financial Services 

Huntington Bank 

Global Bonds - Sr. Portfolio Manager, Sr. Analyst, 

Credit Analyst - Commercial Lending 

JPMorgan Investment Bank, Prudential Securities/Wachovia Securities, 

United States Marine Corps 

Associate Vice President, Credit Portfolio Research Associate, 

Equity Research Associate, Captain, First Lieutenant 

JP Morgan, Western & Southern Financial, Fidelity Investments 

Fund Accountant, Registered Representative 

Page 40 

MBA, The Ohio State 

University 

BS, The Ohio State 

University 

MBA, Ashland University 

BS, Ashland University 

AAB, North Central State 

College 

CFA Level II Candidate 


University 


University 


University 

CFA Charterholder 

CAIA Charterholder 

MBA, Cornell University 

BA, University of Chicago 


BS, Wright State University 

CFA Level III Candidate




Experience 

Education/ 


Erik Cagnina 

Greg Cotterman 

Louis Darmstadter 

Alan J. Davidson 

Pat Edgington 

Mark Ehresman 

Fixed Income 

Portfolio Manager 





Office of the CEO 

Compliance Officer 

Office of the CEO 

Investment Reporting 

Manager 

Fixed Income 


5 16 

1 9 

4 12 

5 47 

Huntington National Bank, D3 Multisport, Reed Financial Services, 

National City Commerce Finance, NatCity Investments 

Vice President/Senior Portfolio Manager-Investments Group, Financial 

Analyst, Underwriter, Investment Officer/Liability Portfolio Manager-Treasury 

Group 

Nationwide Insurance, Invesco, BISYS 

Analyst, Investment Accountant 

Teachers' Retirement System of the State of Illinois, U.S. Small 

Business Administration, U.S. Naval Reserves 

Investment Officer for Private Equities, Regulatory and Financial Analyst, 

Lieutenant 

Mellon Bank, National City Corporation 

Senior Investment and Trust Counsel, Head of Retirement Plan Services, 

Chief Fiduciary Officer 

Armco Investment Management, Inc. 

11 32 BS, Miami (OH) University 

Manager, Investment Services Defined Benefit and Defined Contribution 

9 9 

The Huntington Bancshares Inc. 

Commercial Banking Portfolio Manager and Credit Officer 

Page 41 

MBA, Case Western 

Reserve 

BS, Miami University 


BS, Franklin University 

BM, Capital University 

MBA, University of Chicago 

MA, University of Chicago 

BA, Tulane University 


JD, Harvard Law School 

BA, The Pennsylvania 

State University 


Reserve 

BS, Miami (OH) University 

CFA Charterholder




Experience 

Education/ 


Tony Enderle 

Eric France 

Dan German 

Paul Greff 

Christopher Gregson 

Xinyang Gu 

Fixed Income 

Senior 


Fixed Income 



Risk Manager 

Fixed Income 

Senior 


U.S. Equity 

Senior 



Quantitative Analyst 

9 9 

7 25 

3 12 

1 27 

10 10 

10 10 

Banc One Investment Management Group, BISYS Fund Services 

Huntington National Bank, Kemper National Insurance Companies 

Vice President, Risk Management; Senior Commercial Credit Analyst, 

Commercial Credit Underwriter 

State Street Global Advisors, Munder Capital Management, 

Manufacturers National Bank of Detroit, Standard Federal Bank, 

Xytec Corportation, Onmi Systems 

Senior Managing Director, Head of U.S. Fixed Income, Sr. Portfolio Manager, 

Portfolio Manager, Equity Investment Analyst, Senior Systems Analyst, 

Founder/Partner, Business Manager 

Huntington Bank, First of America Bank Indiana 

Commercial Lending Officer 

The Ohio Department of Development, OPERS 

Data System Coordinator, LAN Administrator, Internet Security Administrator 

Page 42 

BS, Bowling Green State 

University 


The Ohio Police and Fire Pension Fund, The Ohio Bureau of Workers' 

MS, The Ohio State 

Compensation, The State Teachers Retirement System of Ohio, U.S. Marine Corps. University 

MA, Ohio University 

Head of Fixed Income Department, Corporate and MBS Analyst, 

BA, Yale University 

Assistant Portfolio Manager, 1st Lieutenant 


MBA, University of 

Pittsburgh 

BS, Allegheny College 


MBA, University of Detroit 

BA, Kalamazoo College 


BS, Indiana University 

BA, Indiana University 


MS, The Ohio State 

University 

BS, Southeast University, 

China 

Series 63




Experience 

Education/ 


Sajjad S. Hussain 

Mary Ann Kabbaz 

Ryan Khoury 

Nick Kotsonis 

Prabu Kumaran 

Jack Lake 

Fixed Income 



Executive Assistant 

U.S. Equity 


Fixed Income 

Senior 



Senior Risk Analyst 

U.S. Equity 


1 13 

11 11 

1 12 

3 6 

2 13 

3 17 

Ocwen Financial Corporation, Terminus Asset Management Company, 

SunTrust Capital Markets, Fitch Ratings 

Director-Portfolio Manager, Director-Principal Finance and Asset 

Securitization, Director-Credit Products Group 

Red Roof Inns, MM Group, Inc. 

Senior Administrative Assistant, Business/Office Manager 

Susquehanna International Group, Hudson Square Research 

Software Equity Analyst, Equity Research 

Summit Investment Partners 

Fixed Income Analyst, Index Fund Analyst, Financial Analyst 

Lusight Research Inc., Ontario (Canada) Teachers' Pension Plan, 

Oversea-Chinese Banking Corporation, Rashid Hussain Securities, Inc 

Senior Investment Analyst, Assistant Vice-President-Strategy & Change 

Management, Senior Research Analyst 

Victory Capital Management, KeyCorp Trust Services 

Research Analyst, Research Associate, Equity Trader 

Page 43 

BA, Northwestern 

University 


AS, Ohio Dominican 

University 

BS, University of 

Minnesota, Twin Cities 


BS, Miami (OH) University 


MBA, Asian Institute of 

Management 

B Eng (Mech), Anna 

University 



Reserve University 

BS, Marist College 

CFA Charterholder




Experience 

Education/ 


Deryck Lampe 

John C. Lane 

J.G. Lee 

Kevin Martin 

Jerry May 

Vonetta McDonald 

U.S. Equity 

Senior 



CIO 


Fund Manager 

U.S. Equity 


Fixed Income 

Cash/Securities 

Lending Manager 

4 18 

1 30 

9 14 

13 14 

7 19 

Cheyne Capital, FHS Investments, Stein Roe 

Executive Director, Portfolio Manager 

Eastman Kodak, Pennsylvania Public School Employees' Retirement System, 

Makefield Securities Corporation 

Director Pension Investments Worldwide, Chief Investment Officer, 

President 

Mellon Equity Associates, LLP 

Head of Quantitative Research, Vice President/Quantitative Analyst 

Provident Financial Group, Victory Mortgage Ltd 

Corporate Accountant II, Staff Accountant 

Bank One, Boatmen's Trust 

State Farm Insurance, Columbus Urban League 

Analyst 1 1 BBA, Ohio University 

Claim Team Manager, Vice President of Operations 

Page 44 


Cincinnati 

MS, University of 

Cincinnati 

BS, Purdue University 


MBA, LaSalle University 

BS, LaSalle University 

PhD, The Ohio State 

University 


FRM Charterholder 

PRM Charterholder 


Cincinnati 

BA, Thomas More College 

CPA 

Series 63 

MBA, Ashland University 

BA, Abilene Christian 

University 

CTP




Experience 

Education/ 


Scott Murray 

Michael T. Parker 

Gerry Peters 

DeAnne B. Rau 

Chris Rieddle 

Christy Ruoff 

U.S. Equity 


U.S. Equity 

Senior 



Sr. Portfolio Manager 


Markets 


Fixed Income 



Equity Trader 

6 20 

2 8 

1 25 

10 16 

4 21 

Banc One Investment Advisors 

Sector Manager, Senior Equity Analyst 

FBR Capital Markets Corp, Gregory J. Schwartz & Co., Inc. 

Assistant Vice-President, Investment Consultant 

Pennsylvania Public School Employee's Retirement System, 

Susquehanna Intl. Group, Bear Stearns 

Managing Director and Head of Trading, Senior Trader, Associate - NYFX Floor 

Huntington National Bank 

Portfolio Manager, Senior Commercial Credit Analyst, Federal Funds Trader 

Fifth Third Asset Management, Inc., FirstTrust Indiana, First Chicago, 

NBD Investment Management Company, Lumbermens Life Insurance 

Company, Marathon Oil Company 

Vice President and Senior Portfolio Manager, Senior Vice President and 

Institutional Investment Manager, Vice President and Trust Officer, 

Project and Financial Analyst, Financial Analyst, Refined Product Supply 

Analyst 


28 28 Series 63 

Equity Research Assistant, Fixed Income Research Assistant, 

Fixed Income Statistician, Short-term Trading 

Page 45 

MBA, Washington 

University 

BA, University of 

Connecticut 


BS, Wharton, U of PA 


MBA, Drexel University 

BS, Lafayette College 


University 

BA, The Ohio State 

University 

BA, Mt. Holyoke College 

CFA Level II Candidate 

CAIA Level I Candidate 

MBA, Indiana University 

BS, Indiana University 

CFA Charterholder




Experience 

Education/ 


Daniel J. Sarver 

Rick Shafer 

Matthew Sherman 

Samir Sidani 

Todd Soots 

Joan Stack 


Markets 


External Management 

Deputy CIO 


Senior 

Equity Trader 



Fixed Income 

Senior 



Trading Manager 

26 26 

2 

5 

9 

37 

16 

5 9 

12 

8 35 


Domestic Equity Portfolio Manager 

Alaska Permanent Fund, New Hampshire Retirement System, 

Lincoln National, The Aetna, The Hartford 

Chief Investment Officer, Sr. Investment Officer, Director of Investments, 


National City Investment Management Company, State Teachers 

Retirement System of Ohio, BankOne Investment Management & Trust 

Head Equity Trader, Securities Trader 

National City Bank, Sterling Private Investments 

Manager Research Analyst 

KeyCorp, Ohio Savings Bank 

Product Analyst, Secondary Market Analyst 

ING Group, Strong Funds, Bankers Trust Company 

Senior Vice President and Head of Equity Trading 

Page 46 


University 

BS, Marietta College 


BA, Dartmouth College 


MBA, Otterbein College 

BA, The Ohio State 

University 

Series 63 

BA, University of 

Rochester 




University 


University 


MBA, Fordham University 

BA, Mt. Holyoke College




Experience 

Education/ 


Stephen Stuckwisch 

Bradley E. Sturm 

Timothy J. Swingle 

Roger Tong 

Lewis Tracy 

Andrew Urban 

Private Real Estate 




U.S. Equity 

Senior 



Quantitative Analyst 


Senior 




Analyst 

15 15 

17 17 

12 12 

7 16 

10 10 

1 5 

Chemical Mortgage Company, Don R. Scheidt & Company 

REIT Manager, Commercial Servicing/Administrative Officer, Staff Appraiser 

Associated General Contractors, 3M Company 

Real Estate Acquisitions Manager 

U.S. Office of Thrift Supervision, Cummins Krasik & Hohl, CPAs, 

Norman Jones Enlow & Company, CPAs 

Federal Thrift Regulator, Staff Accountant 

Stein Roe, Score Reinsurance Company, Guy Carpenter & Company 

Equity Quantitative Analyst, Actuarial Analyst 

Texas Tech University 

Real Estate Analyst, Equity Analyst, University Professor 

Nationwide Financial, Key Investment Services 

Retirement Specialist, Relationship Manager 

Page 47 


University 

BA, Hanover College 




University 

MA, University of Cincinnati 

MAIR, University of 

Cincinnati 

BA, University of Cincinnati 

BSBA, The Ohio State 

University 


CMT Charterholder 

CPA (Inactive) 

CMA 

MBA, The College of 

Insurance 

MS, New Jersey Institute 

of Technology 

PhD, The Ohio State 

University 


University 

BA, University of California 

at Berkeley 


BBA, Ohio University 

CFA Level II Candidate




Experience 

Education/ 


Kimberly Van Gundy 

Xiaoling Wang 

Erick Weis 

Joyce Williams 

Brian H. Wright 

JoAnn Yocum 



Administration 

Analyst 

U.S. Equity 



Fund Manager 


Portfolio Assistant 


Markets 

Senior 


Fixed Income 

Investment Assistant 

9 9 

1 11 

16 17 

1 3 

1 10 

Holdridge Mechanical 

Sr. Financial Projects Analyst, Accountant 

Citigroup Inc., PriceWaterhouseCoopers Financial / Investment Advisory 

Services 

Financial Consultant, Lead Analyst 

Prudential Securities 

Portfolio Manager, Senior Equity Analyst, Equity Sales 

Levinson Jewelers, Diehl-Whittaker, Inc. 

Accounts Receivable Specialist, Bookkeeper 

Ashland, Inc., Alliance Data Systems 

Manager, Pension Trust Investments, Senior Auditor 

Merck, Principal Financial 

11 25 AS, Bliss Business College 

Research Analyst 

Page 48 

MBA, Franklin University 

BS, University of Dayton 

MS, Columbia University 

M Phil, The Chinese 

University of Hong Kong 

BA, Southwestern 

University of Finance and 

Economics 



University 

BBA, University of Toledo 


BS, Franklin University 

BSBA, Auburn University 


CPA

277 East Town Street Columbus, Ohio 43215-4642 

www.opers.org 800-222-7377

Investment Plan 2011 - OPERS

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