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Meet Mansco Perry - State Board Of Investment Executive Director


When Minnesota State Board of Investment Executive Director Mansco Perry III talks about money management, invariably he’ll sprinkle his conversation with baseball references or compare investments to ice cream flavors: In years past, he’ll note, the choices ranged from chocolate and vanilla to strawberry, whereas today you can also get a little mocha almond, tutti-frutti or cherry raspberry in your portfolio.

But when you manage a $60 billion public retirement fund with an enviable long-term investment-return track record, you think long and hard before throwing tutti-frutti into the mix.

Perry came to SBI in 2013 from Macalester College, where he managed the school’s investments. Before joining Macalester he ran the investment arm of the Maryland State Retirement Agency, and from 1990 to 2008, he worked at SBI for longtime director Howard Bicker. We sat down with “MP3” recently to talk about his first year at the helm of the Minnesota SBI.

What’s your investment philosophy?
I try to be strategic rather than tactical, which really means that we focus on the long term – and when we decide what the asset allocation is, that’s what we try to manage to. I try to be patient and disciplined in what we’re doing. Rebalancing is a policy, so we need to keep within that asset allocation. If it goes out of balance, we try to move it back to where it is supposed to be. We have a strategy and try to follow it. There are a lot of different things to invest in out there, so we try to look at them and try to figure out what’s appropriate for us. You want to understand why you’re investing in something, and also understand why you don’t want to. Take hedge funds. I don’t know if they’re good or bad, but if they’re bad, I want to really understand why they’re bad rather than [simply that] they’re something different and foreign.

 

What lessons do you bring from your time in Maryland and at Macalester?
There’s more than one way to build a successful mouse trap, and you shouldn’t be afraid to evaluate different approaches to things. Doesn’t mean you necessarily do it, but when you’re thinking about what you should do, you should look on different experiences that you had and you might find something that you’ve never done and it turns out to be something that we can profit by in the future. We should look at everything. We might not change a bleepety-bleep thing in the portfolio, but that doesn’t mean that just because we’ve been successful and good that there aren’t other good ideas out there. … On the other hand, I don’t care if [an investment firm] has a track record of delivering 50 percent returns every year, if you can’t understand what they do, you shouldn’t do it.

 

SBI has averaged an annual return of 10.3 percent since 1980. To what do you attribute that success?
The organization has been pretty disciplined, pretty patient, had a long-term focus. We’ve been fortunate; we’ve had more good years than bad. If you narrow it down, it’s pretty simple. There are really only two basic things an investor can do, in my perspective: They can own something or they can lend something. That’s all we do. What’s smart to own and who’s smart to lend to? The smart ones to lend to are the ones you know will pay back the money you lent them, plus a reasonable return. The smart things to own are the things you can put money into and you’ve got some comfort that over a period of time you’re going to get that money back and you’re going to get a nice handsome profit. It’s really as simple as that.

How does your approach differ from that of Howard Bicker?
Philosophically we’re both conservative. He’ll probably tell you that I’m cheap. But I’d say that maybe I’m a little bit more curious about things. Howard probably has more conviction when it comes to making a decision, and he has had an uncanny ability to just zero in on something and focus. I probably over-analyze things and
people would not be exaggerating too much if they said, ‘Well, Mansco maybe goes through a few too many mental gymnastics.’ But ultimately I arrive at a decision that I at least understand the logic of, and when I arrive at it, and I’m convinced, you have to convince me that what I’m doing doesn’t make sense for me to kind of want to waver. Although I’m always willing to listen.

To whom do you turn for advice?
I try to develop a wide variety of networks of people I respect and believe have some intelligence and experience who maybe do the same thing I do or maybe work at some of the firms we hire. I try to get a lot of diverse perspectives on things. You can’t be afraid to make mistakes, but if you do, you try to learn from them. You try to pick the brains of a lot of people you respect. ... The one good thing about working for a fund as large as ours is that it gives you access to some of the brightest people in the world.

What’s your opinion of defined contribution vs. defined benefit plans?
I’m a strong believer in defined benefit plans for a variety of reasons. We’re trying to provide retirement income security, and you get that with both defined contribution and defined benefit but there are more opportunities to invest for higher rates of return in a defined benefit plan. There’s this massive pooling effect such that generally you’re professionally managing the entire portfolio whereas [with individual investors], some may know what they’re doing and some may not. … Having a defined benefit plan as a base is something I believe is critical. Defined contribution plans as a supplement to that makes a lot of sense.

Why choose a public sector career?
One of Yogi Berra’s famous sayings is, ‘When you come to a fork in the road, take it.’ I didn’t start out to do this, but over my life I’ve come to a lot of forks in the road and the ones I took led me here, and I kind of saw that I liked it. When I woke up in the morning I had some interesting things to do. That doesn’t mean I didn’t think about doing other things, and I turned down a few organizations because I liked what I was doing. The last fork I took led me back here. If you’re asking me what job would I pick for myself if I could, I’d be the owner of the New York Yankees and I’d be in seventh heaven, but no roads led to that.