Affirmative Action Mutual Fund?

I’ve got some money in the State employees deferred compensation program, so I get quarterly statements.

Included with the one that arrived on Lincoln’s Birthday was a letter from William R. Atwood, Executive Director of the Illinois State Board of Investment.

If was peculiar.

There may have been others, but this is the only one I remember.

It says that the Board of Investment “has concerns regarding recent performance of Ariel Capital Management.”

Apparently, it has done well enough over the “longer term,” that is, over ten years, but “the performance over the one, three and five year time periods has caused a great deal of concern.”

Catch that?

“…a great deal of concern.”

Since last March, “Ariel has been on the DC plan Watch List.”

The Board of Investment continues to have regarding recent performance, but

is also aware that some investors take comfort in the long relationship that the deferred comp plan has with Ariel, and that some investors value the option of investing with a minority owned Illinois firm.

Next, the “on the one hand, this, and, on the other hand, that” paragraphs:

Thus, the Board has decided not to terminate Ariel as an option…at this time…(but it) will keep the firm o the Watch List…It is left to the discretion of each plan participant as to in which play option they choose to invest.

As a result of Ariel’s recent performance, (the Board) has terminated its relationship with Ariel under which the firm managed defined plan assets under (the Board’s) fiduciary control

So, if you want to keep your money in the firm, go right ahead, but we’re pulling all the other money the firm had out.

State employees have almost $132 million invested in the mutual fund. That’s a little less than 5% of the assets. Put another way, it’s almost 84% of the money invested last year.

The State Board of Investment had $165,730,099 as of the first of 2006 and zilch as of the first of this year.

All was withdrawn by last November 17th.

Posted originally on McHenry County Blog, a web site that is alive and kicking on weekends.