Mark Steed is the new chief investment officer of the $9.8 billion Arizona Public Safety Personnel Retirement System (PSPRS).
Steed has been acting CIO since July, when Ryan Parham, the former chief, retired after more than a decade at the helm. Before Parham left, Steed was deputy CIO and chief of staff.
The new CIO has been with the fund since 2007, when he joined as an investment intern, becoming a financial analyst shortly after. He eventually moved up from an analyst to lead portfolio manager and chief of staff, to his previous and current roles. Before the fund, he worked as an investment banker for JPMorgan Chase and an analyst for the Beneficial Financial Group.
Steed has managed every asset class in the public safety pension’s portfolio during his 11-year run. The fund, which co-mingles the investments of three separate state government pension plans (one for police and fire, another for corrections officers, and the third for elected officials) credits him with pioneering the use of predictive analytics and processes for measuring “the accuracy of investment team member predictions.”
He was also a forecaster for the behavioral economist Phil Tetlock’s Good Judgment Project, a research group, which attempts to predict world events based on aggregate data and its participants projections.
Jared Smout, the fund’s administrator, called Steed “the right person for this moment at PSPRS.”
“Mark’s experience and his vision have been instrumental in crafting the system’s new investment strategy, an approach that balances the need to earn profits for the fund with the need to protect our members, Arizona employers and taxpayers against the potential for another massive downturn in the global financial markets,” he said.
The new CIO has not yet decided on what changes he will make to the retirement system due to how recent the promotion is and an upcoming board vote.
“It’s a little too early for me to say for sure,” Steed told CIO. “We’re just in development stage right now. We’re in the process of bringing in a PCR/general consultant along. We’re going to have a discussion at the board level November 1 and I think at the end of November.” He said the big holdup is the ballot measure concerning two of the three plans the retirement system manages. If passed, the move would change some of its benefits structures, which in turn, would also change its liabilities.
“Anytime liabilities change, you need to reassess that side of the portfolio,” Steed said. “We’re kind of in a wait-and-see mode until we have clarity on that ballot measure.”
The plan is not yet sure if it will search for a new deputy CIO as it transitions to the Steed era.
“We haven’t made a decision to appoint somebody, and we haven’t made a decision not to,” said Steed. “It’s not something that we’ve discussed yet.”
As for allocation shifts, Steed wants to wait a quarter to see how the market shapes up following the results of the US midterm elections.
“The other thing we’ve talked about at the board level is waiting the bull market out a little bit. It’s been the strongest bull market in US history and we need to wait that out as we’re coming to a relatively slow quarter,” he said. “We like our asset allocation. We want to see if there are any policy or economic changes that might slow that thing downward. We don’t want to make too many drastic changes ahead of what could be a pretty remarkable regime shift.”
In the meantime, the Arizona public safety pension will brainstorm ideas and collaborate with NEPC, its consultant, and its board members to gain support for what it may do in the near future.
“We haven’t changed CIOs in 10 years, so it’s just how we’re approaching it. Our trustees are relatively new. There were some pension reforms that took effect,” said Steed. “We want to make sure if and when we transition that everybody’s on the same page—that everyone’s comfortable with the new direction.”
The retirement system is 46.6% funded, according to its latest annual report.