OCERSOrange County Employee Retirement System (Santa Ana, California)
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OCERS encourages more prevalent use of this pricing structure as the simplest and fairest way for public pension funds to realize meaningful economies of scale and pricing concessions that are appropriate to their patient, long-term investment horizon.
Another of the strategies advocated in the OCERS fee policy is the creation of "mini-pools" for public pension plans--a selected investment manager would offer a separate fund or pool that offers lower pricing, based on the combined assets in the pool.
In September 2013, OCERS awarded an engagement to an emerging markets equity manager that has, in turn, created a trust for public pension plan investments that will offer fee discounts based on the total size of the pool.
The OCERS fee policy encourages staff to pursue collaborative procurement strategies and other methods of lawfully increasing the pension plan's bargaining and purchasing power.
As a fiduciary precaution, the OCERS trustees requested a memorandum of law from expert outside counsel on whether such a collaborative effort would raise anti-trust issues.
The legal guidance prepared for OCERS did address this broader national P4 Network potential, which could ultimately include many investment disciplines and participants nationwide, but OCERS trustees are "starting with baby steps," with an abundance of caution, to see first how this private equity procurement works in practice.