 Marshall Islands' Social Security Rebounds
by Giff Johnson
The Marshall Islands Social Security Administration (MISSA) investment accounts in the United States have rebounded strongly, generating more than $4.3 million in earnings in less than one year, reports Frank Armstrong of Investor Solutions, Inc.
Investor Solutions was hired last November to bring MISSA objective advice, reduced costs, risk management, true global diversification, and state of the art implementation of modern financial theory, according to a release from MISSA.
Armstrong's company was hired after MISSA suffered two years of multi-million dollar losses during the 2001-2002 period when the US stock market dived, after years of strong performance.
According to Armstrong, the results since last November have been superlative with the firm generating above-benchmark returns in both down and up markets.
Actual results were 6.3 percent for the quarter ending September 30, 18.88 percent year to date, and 18.05 percent since inception with the firm last November.
The beginning value of $23,710,348.61 on November 16, 2002 plus a deposit of $515,134.90 (totalling $24,225,483.51) has grown to $28,541,814.51 on September 30, 2003. Total investment gains were $4,316,331.00 since inception of Investor Solutions management.
Performance has been propelled by a massive global bull market and by the innovative strategic direction Investor Solutions, Inc. executed for MISSA, Armstrong indicated.
"Short term results have far exceeded our most optimistic expectations," said Frank Armstrong, President of Investor Solutions. "That's a pleasant surprise. But I certainly wouldn't want anybody to think we can perform this well relatively every year."
"More to the point, we think our strategy will be best over the long haul for MISSA. Diversification reduces risk, a global tilt towards small and value firms enhances expected returns, and low total investment costs insure that the benefits stay in the MISSA account."
In addition to the stock market investment of $28,541,814.51, MISSA maintains certified deposits (CDs) at Bank of Marshall Islands worth $3,537,759 and also owns BOMI stocks valued at $4,406,152 for a total retirement fund investment of $36,485,725.51.
"MISSA is in really good shape," said board chairman Jack Niedenthal commenting this week on the increasing value of Social Securityıs US investments.
Although the retirement fund is still far from having more than a fraction of the $200 million in future retirement liabilities, it's on the right track to insure that there will be money to pay future retirees, Niedenthal said.
The combination of increasing investment worth, reducing administrative costs and increasing tax collections locally has improved the future outlook for the retirement fund, he indicated.
Niedenthal also noted that the most recent Deloitte and Touche audit of MISSA shows no "findings" (problems) in the administration of the retirement fund, a development he said demonstrates that the current staff of MISSA are doing an excellent job operating the retirement fund program.
--Reprinted with permission from the Marshall Islands Journal, October 24, 2003.
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