Board selects Seattle-based management for OAR fund

Temple will hire the Seattle-based Pugh Capital Management to manage its fixed-income Operating and Auxiliary Reserves fund, the investments committee of the Board of Trustees announced in a meeting Wednesday morning.

Pugh, which has $2.8 billion in assets, also manages the investment portfolio for corporations and the University of Washington.

Kaiser told the trustees that his office, with help from Temple’s financial advisors Cambridge Financial Associates, considered five firms and interviewed three before recommending Pugh.

The university will notify Pugh this week and ask for a final fee negotiation, which Kaiser said was currently 26.7 basis points, or 0.267 percent of the managed assets. Investments committee chair and local investment banker Christopher McNichol said that he would like to see the fee reduced, and noted that the committee only approved the selection of Pugh, not the fee.

The OAR fund exists to manage university debts through the use of fixed income sources, Kaiser said.  Since the income is fixed, no risk is involved. “You just need to align your investments with your liabilities,” he explained. Though his office could manage the fund, it was more efficient to leave it to Pugh.

The Investments committee recommended that the OAR Fund, founded in 1984 as the Retirement of Indebtedness Fund, be renamed in a meeting March 26, a resolution waiting for approval at the May 13 general body meeting.  The general body rarely rejects committee recommendations.

The trustees’ audit committee met at 2 p.m. in executive session and lasted about an hour, Kaiser said.

The next trustees meeting is the facilities committee on May 5 at 12 p.m., a newly rescheduled date from the originally scheduled April 30 meeting.

Joe Brandt can be reached at or on Twitter @JBrandt_TU.

Investments committee renames account

The Investments Committee of Temple’s Board of Trustees will rename and re-purpose its Retirement of Indebtedness Fund, it announced at a public session meeting today in Sullivan Hall.

The new fund, now called the Operating and Auxiliary Reserves Fund, will still provide investment support to the auxiliary and operating budgets for debt-financed projects as the predecessor did.

The trustees present, among them committee chair Christopher McNichol in person and Nelson Diaz by phone, agreed that the name change would better reflect the fund’s purpose and eliminate the misconception that the fund’s function is to repay university debt.

The committee also moved to revise parts of the Investment Policies to include guidelines for the new fund. The fund will be allowed up to a 50 percent allocation in U.S. corporate bonds deemed “high-quality.”

This allocation would add about 55 basis points to the investment. One basis point is equivalent to a value rise of one hundredth of one percent.

“It would only slightly change the risk profile,” Ken Kaiser, Temple’s chief financial officer and treasurer said in his explanation to the trustees.

This change is part of an ongoing effort to structure the other investment pools and funds similarly to the pension and post-retirement funds, which have fixed income allocations.

The management of the pension and post-retirement funds was shifted in February from RS Investments to Van Eck Associates Corporation, a larger firm based in New York City.

The meeting met first in executive session at 10 a.m. before moving to public session from 10:25 a.m.-10:35 a.m. It moved back to executive session at that time.

The next Investments committee meeting is scheduled for Wednesday, April 23, at 10 a.m.

Joe Brandt can be reached at or on Twitter @JBrandt_TU.