Pension Manager: Massachusetts Pension Reserves Investment Management Board
Assets Managed: $51 Billion (Oct. 31, 2012)
PE Assets Managed: $5.9 Billion
PE Allocation (Target): 11.6% (10.0%)
Chief Investment Officer: Michael Trotsky
The $51 billion pension system oversaw $5.9 billion in private equity capital as of Oct. 2012, about 11.6 percent of the portfolio. The pension’s long-term private equity allocation target is 10 percent.
Bailey comes to MassPRIM from High Vista Strategies, an investment fund based in Boston. His new title at the pension management agency will be senior investment officer and director of private equity.
In a statement, Massachusetts Treasurer Steven Grossman said: “Private equity is the best performing asset class at PRIM, and we are widely recognized as having one of the most thoughtful, mature and innovative PE portfolios in the country.” He added, “We’re counting on Michael Bailey to maintain that leadership position.”
E-mails sent to MassPRIM were not immediately returned.
Bailey’s hiring fills another piece of the staffing puzzle facing Michael Trotsky, who is MassPRIM’s executive director, and since October, its chief investment officer as well. In November, MassPRIM named Eric Nierenberg as senior Investment officer for hedge funds, and the hiring of Bailey completes the ranks of the pension’s most senior investment staff.
Over the past two years, MassPRIM has seen a significant brain drain among its senior investment managers, all of whom left for better-paying roles in the private sector, a situation that Trotsky has said was due to the agency’s inadequate pay structure. “We lose just about 100 percent of our top employees to the private sector, and by statute, we have to be in Boston, which is a very competitive market for financial talent,” Trotsky said in an October interview with Buyouts.
Besides Smith, other recent notable departures include Stanley Mavromates, the former chief investment officer, who left in May 2012 to be CIO at Mercer, the consulting group; and Michael Langdon, the deputy head of private equity, who left in 2011 to join Hermes Global Private Equity.
The compensation issue was partially addressed in December with a new incentive plan that increases bonuses for strong performance. As the highest paid member of the MassPRIM staff, Trotsky is paid $295,000 annually.