June_8 _2015_Presentation_Slides_-_US_Core_Fixed_Income_Investment_-Smaller_Asset_Managers_Pilot_Program.pdf

US Core Fixed Income Investment

- Smaller Asset Managers Pilot Program

June 8, 2015

• Opening remarks

• Welcome to the Pension Benefit Guaranty Corporation

• PBGC protects the pension benefits of more than 41 million Americans in private‐sector pension plans. The agency is responsible for more than 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars. Its operations are financed by insurance premiums, investment income, and with assets and recoveries from failed plans. For more information visit PBGC.gov.

• Administrative Matters

• The information provided today is for information purposes only and is subject to change. Please refer to the solicitation once posted on FedBizOpps (FBO) in regards to the requirements.

• This conference is being audio and video recorded.

• The video of today’s proceedings will be posted on FBO

• Participants on the conference bridge

• Please mute your phones

• Please do not use Hold

• Introductions of PBGC Representatives:

• John Greenberg (Corporation Investments Department)

• Steve Block (Procurement Department)

US Core Fixed Income Investment Smaller Asset Managers Pilot Program

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific instructions and guidance regarding the requirement 2

• Purpose

• The purpose of this event is to describe the upcoming fixed income solicitation and specifically help attendees understand the procurement process that PBGC uses to select money managers, a process that is unfamiliar to many smaller firms.

• Agenda

• CID – Agency Mission and Corporate Investments Department Overview

• CID – Smaller Asset Managers Pilot Program

• PD – Conducting Business with PBGC

• PD – Solicitation Structure (Uniform Contract Format)

• PD – Procurement Process Overview

• Questions

• There will be a question and answer period at the conclusion of the presentation. At that time questions will be answered to the extent possible.

US Core Fixed Income Investment Smaller Asset Managers Pilot Program

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific instructions and guidance regarding the requirement

PBGC - Corporate Investments Department

Presented by

John F. Greenberg, Chief Investment Officer

• PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of private-sector defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum.

• PBGC is not funded by tax revenues. Rather, PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments, and receives funds from pension plans it takes over.

• The PBGC maintains two investment funds:

• Revolving Fund – receives all premium payments and is invested solely in “book-entry” U.S. Government securities held at the U.S. Treasury.

• Trust Fund – receives assets from terminated, insured pension plans.

• The Smaller Asset Managers Pilot Program will be funded with assets from the

Trust Fund.

Smaller Asset Managers Pilot Program:

PBGC Overview

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific

• To ensure mission success, the Corporate Investments Department (CID) manages the PBGC’s investment program. The investment program includes both the Revolving and Trust Funds.

• The Corporate Investments Department manages the investment program in accordance with a Board-approved Investment Policy Statement.

• External investment managers are retained to manage the investment program’s assets with care, skill, prudence, and diligence consistent with legal requirements and industry best practices. External managers are expected to act as a fiduciary.

• All external active investment managers contracted with the PBGC have a stated goal to outperform their relevant benchmark within acceptable levels of risk.

Smaller Asset Managers Pilot Program:

Corporate Investment Division Overview

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific

• Previous PBGC requests for proposals (RFPs) had large AUM’s that made it hard for smaller asset managers to compete successfully.

• The Smaller Asset Managers Pilot Program is the first attempt at increasing smaller asset managers’ opportunities to manage PBGC investment mandates.

• The Pilot Program expects to achieve the goal of increasing opportunities by:

• Reducing the required assets under management for eligible managers.

• Reducing the absolute size of the PBGC mandates associated with this pilot program to between $50 and $250 million.

• Maintaining the industry best-practice of limiting each mandate to a prudent percentage of each selected manager’s assets under management.

• Contracts will be awarded to more than one manager.

• Only responses from individual managers will be considered. Fund of funds (manager of managers) will not be included for this pilot program.

Smaller Asset Managers Pilot Program:

Program Overview

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific

• Proposals for solicitations shall meet all firm and product mandatory requirements in order to be considered.

• Offerors shall provide documentation to demonstrate compliance with mandatory requirements when necessary.

• Firm mandatory requirements include:

• Being SEC registered for at least 5 years

• Agrees to act in accordance with ERISA standards

• Firm has at least $250 million in assets under management (there is no revenue or assets under management maximum limit)

• Firm has a positive net worth

• Firm will have or will acquire an ERISA fidelity bond in the amount of $1 million

• Firm will have errors and omissions coverage in the minimum amount of $2 million

• Firm will act as a fiduciary

Smaller Asset Managers Pilot Program:

Firm Mandatories

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific

• Proposals for solicitations shall meet all firm and product mandatory requirements in order to be considered.

• Product mandatory requirements include:

• Being actively managed against the Barclays U.S. Aggregate Bond Index

• Available in a separate account format

• Product has at least $250 million in assets under management (there is no maximum AUM limit)

• Product has at least one tax-exempt institutional account with a minimum of $25 million invested

• Performance history is GIPS compliant

• Average of the rolling 36-month information ratios for the past 10 years (or since inception, whichever is shorter) must exceed 0.50

Smaller Asset Managers Pilot Program:

Product Mandatories

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific

• Information ratio is a ratio of portfolio returns above a benchmark (excess returns) to the volatility of those returns.

• The ratio seeks to identify managers that can consistently add value at acceptable levels of risk.

• The RFP will include a detailed explanation of how to properly calculate the information ratio.

• To calculate one monthly information ratio:

• (Rp – Ri)= Annualized 36-month excess return (proposed product vs. BC Agg)

• Sp-i = Annualized 36-month standard deviation of excess returns

• The average of the last 10 years of information ratios (or since inception, whichever is shorter) will be the information ratio necessary to assess each manager.

Smaller Asset Managers Pilot Program:

Information Ratio Overview

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific

Presented by

Steve Block Director, Procurement Department

PBGC - Procurement Department

Procurement Department Conducting Business With PBGC

• System for Award Management Registration (www.sam.gov)

• Registration at www.sam.gov is required PRIOR to any entity receiving the award of a federal contract. Registration is not required to participate in this solicitation; however, it is required in the event that an award will be made to your firm.

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific instructions and guidance regarding the requirement 12 http://www.sam.gov/ http://www.sam.gov/

Solicitation Structure

• Uniform Contract Format (UCF)

• Part I – The Schedule

• Section A – Solicitation/Contract Form

• Section B – Supplies or Services & Prices or Costs

• Section C – Statement of Work

• Section D – Packaging and Marking

• Section E – Inspection & Acceptance

• Section F – Deliveries or Performance

• Section G – Contract Administration Data

• Section H – Special Contract Requirements

• Part II – Contract Clauses

• Section I – Contract Clauses

• Part III – List of Documents, Exhibits, & Other Attachments

• Section J – List of Attachments/Attachments

• Part IV – Representations & Instructions

• Section K – Representations, Certifications, & Other Statements

• Section L – Instructions, Conditions, & Notices to Offerors

• Section M – Evaluation Factors for Award

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific instructions and guidance regarding the requirement 13

• It is important to understand the entire solicitation.

• Special Attention to Section H, “Special Contract Requirements,” and Section I, “Contract Clauses.”

• PBGC is a Federal Government Agency and adheres to the Federal Acquisition Regulations (FAR).

• It is possible that your firm may request exceptions and/or deviations with the terms.

• All exceptions and/or deviations shall be identified in the proposal for consideration and negotiation.

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific instructions and guidance regarding the requirement 14

• Part IV (Sections K, L, & M) represents the requirements for the proposal and its submission.

• Ensure that Section K, “Representations, Certifications, & Other Statements” is filled out completely and accurately.

• Provide special attention to Section L, “Instructions, Conditions, & Notices to Offerors” to ensure that the contents and format of the proposal conform to the stated instructions. Failure to comply may eliminate a proposal from consideration.

• Be mindful of Section M, “Evaluation Factors for Award,” in terms of how the Government will evaluate all proposals.

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific instructions and guidance regarding the requirement 15

• Solicitation will be issued on or about June 15, 2015 at FBO under solicitation number

PBGC01-RP-15-0025.

• The information provided today is for information purposes only and is subject to change. Please refer to the solicitation once posted on FBO in regards to the requirements.

• The solicitation will be issued on a full and open competitive basis utilizing a Best Value Trade Off Source Selection methodology. For more details, please refer to Section M of the Solicitation.

• There will be a Q&A period for Offerors to submit questions specific to the solicitation for consideration and the official responses will be posted at FBO.

Procurement Department Procurement Process Overview

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific

Procurement Process Overview

• Upon receipt of the proposals, the evaluation process will begin.

• The process will include a compliance review to ensure the proposal complies with the requirements of Section L, “Instructions to Offerors.”

• Compliant proposals will proceed to “Phase I” of the evaluation process, which will consist of reviewing the Offerors’ responses to the Firm and Product Mandatories on a Pass/Fail basis.

• Proposals that meet the mandatories of “Phase I” will proceed to “Phase II” for the technical and price portion of the Evaluation.

• At the conclusion of “Phase II” the Government reserves the right to establish a Competitive Range limiting discussions to the most highly rated proposals.

• The Government will open discussions with those proposals that are within the competitive range. Following discussions, offerors will be given the opportunity to revise their proposals. A common due date will be established for the receipts of the proposal revisions.

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific

Procurement Process Overview

• Final Proposal Revisions / Basis of Contract Award

• The Government will evaluate the revised proposals in accordance with the evaluation criteria stated in the solicitation.

• Upon completion of the evaluation, the Government may award contracts to one or more Offeror(s) whose proposal(s) have been determined to be most advantageous and represent the best value to the Government.

• Pre-Award/Post Award Debriefings

• If eliminated from the competition at any point during the evaluation process, the firm will be notified in writing and may request a pre-award debriefing.

• Upon contract award, all remaining Offerors will be notified and may request a post-award debriefing.

• The purpose of the debriefing is to share information with the Offeror to improve its proposal for future solicitations and will include the reason that your firm was eliminated/not selected as well as the strengths and weakness of the proposal.

For informational purposes only and subject to change. Refer to the upcoming solicitation PBGC01-15-0025 for specific

Closing

• Solicitation is anticipated to be uploaded on www.fbo.gov on or about June 15, 2015.

• Updates posted on FBO

• Register in SAM!

http://www.fbo.gov/