General Consulting Services

Strategic Investment Advice

Mindful of clients' near-term financial needs and immediate market conditions, Meketa Investment Group looks ahead ten to twenty years when advising clients. Our Strategic Investment Advice incorporates long-term policy, asset allocation, manager selection and evaluation, and risk control.

Long-Term Policy

We initiate new client relationships with a formal Initial Review that is designed to achieve the following objectives:

  • Identify and describe the major components and characteristics essential to the long-term success of an investment fund.
  • Provide a brief review of these components and their present status for the fund.
  • Develop a long-term action plan including the priority level for each project.

Asset Allocation

Continually, we develop forecasts for the potential returns and risks of all types of investment assets. Aided by statistical models, scenario tests, and common sense, we anticipate the behavior of various blends of asset classes. Using this information, we customize an asset allocation policy to match the client's needs and preferences. Meketa then works to carefully implement that policy. We never seek to "time the market" or make short-term, speculative changes to asset allocation policies.

Manager Selection and Evaluation

Investment managers are highly paid for a difficult and complex job. We recommend only those with clear and consistent strategies, deep and stable staffs, and long-term records of success. For each client, Meketa helps to assemble a team of specialists with non-overlapping strategies.

For each manager employed, we prepare detailed investment guidelines. Meketa stays in close contact with the key investment professionals in these firms: by telephone, by electronic messaging, and by frequent, in-person visits. Occasionally, it is necessary to terminate a manager. When seeking a replacement manager, we begin with a search of three databases with more than three thousand firms.

Risk Control

The financial markets are risky and volatile. Meketa Investment Group helps clients control risks by diversifying, by avoiding fads and speculation, and by planning carefully. Our typical client's equity allocation consists of over 1,500 securities, selected by a team of several active managers, and augmented by specific index funds. We avoid large bets on equity style, company size, or industry.

To further control risk, guidelines explicitly forbid managers to engage in speculative investments. As a result, no Meketa Investment Group client has ever lost money on leveraged derivative strategies, market timing schemes, or portfolio insurance.

Quarterly Status Reports

Every quarter, we prepare a detailed written status report for our clients. This report, which can be up to seventy pages in length, is not a simple, computerized scorecard. Instead, our report is a thorough summary of all of the important information Trustees need to do their jobs. It is written in plain English.

We present our reports in person. When appropriate, we do not hesitate to make specific recommendations.

Fund Coordination

Meketa Investment Group assists with many day-to-day operational decisions and takes full fiduciary responsibility in doing so. We seek to protect fund Trustees, who are generally not investment professionals and cannot devote full time to the job. Situations requiring immediate attention frequently arise; Meketa handles them in real time: to protect the fund, to protect the Trustees, and to ensure the highest possible returns.

On large, complex funds, operational enhancements can have a large impact. For example, a small change or "fine tuning" that results in a savings of one hundredth of one percent per year brings an additional $100,000 to the bottom line of a billion dollar fund.

Below are examples of issues that we frequently handle as Fund Coordinator.

Supervising Manager Transitions

Unfortunately, it is sometimes necessary to fire a manager and hire a replacement. It is enormously expensive to instruct a terminated manager to liquidate its portfolio and provide cash to the new manager. Our approach is labor-intensive, but it can save a fund hundreds of thousands of dollars in unnecessary brokerage and execution costs.

Protecting Trustees

Trustees serve without compensation, and yet are directly liable for any problems that occur. Consequently, much of our work is devoted to the protection of Trustees. In our judgment, the best protection is afforded by avoiding surprises, and by dealing with potential problems before they become actual problems.

For example, we monitor all managers' portfolios for compliance with their investment guidelines. We ensure that managers inform us immediately if there are any material changes in their business and we look for unannounced changes in investment strategy. Meketa fully documents this work for our clients' records.

Developing A Crisis Recovery Plan

Periodically, investment crises occur, even in the most soundly structured funds. For example, all of a manager's key professionals may leave suddenly to form a new company, leaving fund assets unattended.

Together with clients, Meketa Investment Group develops a Crisis Recovery Plan that defines emergencies and sets a procedure for dealing with them. We plan carefully for events that we hope will never happen.

Managing A Safety Reserve

A Safety Reserve is a highly specialized portfolio designed to ensure that all benefits will be paid on time, in a worst-case scenario: a market catastrophe combined with a sudden increase in early retirements and lump-sum withdrawals.

Using actuarial projections, we help create a portfolio of U.S. Treasuries matched to the fund's worst-case liabilities. This Safety Reserve could be used to pay benefits over a period of three to six years, without the forced sale of long-term assets. Such portfolios allow Trustees to invest the overall fund more aggressively.

Centralizing Cash Management

We design "cash sweep" programs that, each day, gather the cash of the fund's investment managers. The cash is then invested by a specialized manager that can earn higher returns than the custodian bank's cash vehicle. Such programs can add about $150,000 per year for a fund with $30 million in working cash.

Directing Fund Cash Flows

Frequently, a client's fund office will request cash to pay net benefits. In response, Meketa Investment Group reviews all of the various cash balances among the funds managers, and identifies the most efficient source of cash. We then contact the managers and custodian bank to effect the transfer of the necessary funds to the benefits paying checking account.

Controlling Unusual Investments

Investment managers call Meketa Investment Group to request permission to invest in a new "opportunity," on behalf of our clients. Generally, these opportunities are newly created securities not addressed explicitly in the manager's guidelines. Our job is to perform research and analyses to determine quickly whether or not the proposal is appropriate and to make recommendations to the Trustees.

Negotiating Fees

Meketa Investment Group continuously scrutinizes all of the operating costs associated with a fund's investments. Wherever possible, we negotiate lower fees or more favorable terms. For a typical client, we recover our own fees many times over every year.

Receiving Class Action Settlements

A client's fund is sometimes a party in class action lawsuits filed by aggrieved shareholders. Meketa Investment Group works with the fund office to ensure that the fund receives any settlements due from these actions.