Investment Plan - OPERS

2 0 1 0 I N V E S T M E N T P L A N
INVESTMENT PROGRAM
Report from the CIO
Dear Members of the OPERS Board of Trustees:
Developing a plan instills a discipline to remain focused on the investment goals against which the
Division’s performance is benchmarked. It is an honor to present the 2010 Annual Investment Plan. This
plan is a collaborative effort of the OPERS Investment Division Staff and was discussed in detail with
OPERS Investment Advisors.
In our industry, value is created through tested tenets – by generating target returns for the total fund
through each asset class and portfolio and by maintaining a competitive cost structure relative to our asset
allocation. Performance will be driven by our insights and discipline and our ability to hire and retain key
investment professionals who share our, and OPERS’, commitment to excellence. Our efforts are aligned
not just with our investment goals but, more importantly, with the Investment Division’s core values and
OPERS’ strategic objectives.
Review of 2009 (through October 2009)¹
Although we tactically address the opportunities and challenges in the capital markets, we remain
disciplined institutional investors with a long-term strategic asset allocation designed to meet our plan
objectives. Our policies are not predicated on short-term economic cycles but rather on a long-term time
horizon appropriate to our pension liabilities and health care commitments.
The panic of 2008 has receded, particularly in the capital markets where it began. The economic
recession, caused by both the panic and economic excesses, has ended. The consensus believes that the
recovery will be an extended period of subdued growth based on a “debt hangover.” While that case makes
sense, consensus expectations should be adopted cautiously. The U.S. economy that emerges from this
recession will necessarily be led by different forces than those which led the last cycle; housing and retail
spending are still in recession-mode. The level of trade, the value of the dollar, the productivity of workers,
immigration policy, the wars abroad and many other factors will impact growth, regardless of debt levels at
a point in time.
The OPERS Board of Trustees (Board) and Staff’s efforts have been stress-tested by market events. While
found not to be perfect, it is important to recognize that we have all passed the test – by quite a margin, in
fact. Ours is a highly complex endeavor, on a scale that is breath taking. In order to fund and provide for
the benefits our members have earned, OPERS has had to become a huge financial enterprise. Our
capital is invested from Vietnam to outer space, but also down to simple products we all use every day and
in companies headquartered as close as downtown Columbus. The fruits of that capital are brought back to
our fund and made available for benefits.
¹ Detailed information of actual 2009 accomplishments will be reported in the 2009 OPERS Comprehensive
Annual Financial Report, published at a later date.
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