FROM: Amy McInerny, Chief Financial Officer
SUBJECT: SBCERA Investment Fee and Expense Review.
RECOMMENDATION:
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SBCERA Investment Fee and Expense Review.
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BACKGROUND:
This annual report has been prepared at the request of the Board as part of its comprehensive review of the fees and expenses associated with the SBCERA Investment program. In addition, this staff report is intended to outline both the scope of each reviewer and the breadth of each reviewer in the context of fees and expenses charged to SBCERA for the management of the investment program.
Invoice review takes place across both the investment department and the fiscal department. In addition, SBCERA has engaged an independent CPA firm to review manager fees, expenses, performance fees if applicable, and contract adherence.
As invoices arrive at SBCERA, the investment department reviews the fees for completeness. Any fee must have appropriate supporting material to process the invoice. If that backup material isn't complete, the investment team member will inform the manager of the need to provide additional information. Obvious errors are also flagged are returned to the manager. Typical requests require the manager to provide the calculation used to arrive at their billed total. Where possible, we have requested an excel spreadsheet, which many managers accommodate. The investment team member then compares the total charged against previous billings to ensure that it is reasonably in-line with past invoices. If an invoice seems to be markedly different, the team member follows-up with the manager to determine the reason for the change. When managers provide NAVs, the investment team checks those against the State Street performance reports.
Regarding any questions that arise after the review, our team member will typically check the agreement and/or go back to the manager. Additional escalations include but aren't limited to pulling in the investment officer in...
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