Much has changed since the market first crashed in 2008, State Investment Council board members and staff told the Albuquerque Journal in a story published Monday ( http://bit.ly/1jhVeZM).
While some of today's robust returns reflect the current bull market for stock investments, they said improvement in fund performance, plus the council's smooth functioning nowadays, are the result of four years of steady, major reform.
"The council has carried out one of the biggest portfolio overhauls in the country in the last several years," SIC spokesman Charles Wollmann said.
That includes fundamental changes in everything from the makeup and selection of council members to how decisions are made and how money managers and consultants get hired.
Apart from structural changes, the council has carried out a thorough, bottom-up review and realignment of nearly all investments and strategies.
"We've completely reworked the portfolio," council member Harold Lavender said. "It had to be totally restructured. We've roughly reinvested about $12 billion over the last four years."
The reforms have imposed a professional management process at all levels, including best practices regarding investment decisions as well as transparency in all council proceedings and transactions, said SIC Vice Chairman Peter Frank.
Previously, investment decisions were being driven solely by what the chief investment officers thought should be done, and that opened the door to potential political influence.
In 2009, pay-to-play scandals erupted, leading former chief Gary Bland to resign. Lawsuits against Bland and more than a dozen third-party marketers and placement agents followed.
The council estimates that tens of millions of dollars were siphoned away through improper payments and losses attributable to political influence in investment decisions.
The council has recovered about $26 million to date from some agents and investment firms, including Aldus Equity Partners and Vanderbilt Capital Advisors. But lawsuits are still pending against many more.
The council now has an arduous vetting process for hiring investment managers and consultants. Nearly all recommendations from new managers are also brought directly to the council for final approval.
"Previous policy gave the state investment officer huge latitude, with him calling the shots on investments and basically no voting by the council," Lavender said. "If he liked it, he made it happen, and if not, it didn't. Now, the council votes to approve any investment over $50,000."
At the end of 2013, the council had an estimated $18.64 billion under management.
Last year also saw increases in returns on fund investments that placed New Mexico among the better-performing funds compared to its peers nationwide. In 2009, the state was ranked among the bottom 5 percent of funds for year-over-year returns.
Information from: Albuquerque Journal, http://www.abqjournal.com