Equity Investment Fund

The Equity Fund of the North Carolina Retirement System is managed by independent investment advisors who are hired after an extensive search process conducted by the State Treasurer and the Investment Division.  Investment managers are retained to actively manage equities or passively replicate a particular stock index such as the S&P 500.  Each active manager is given a specific mandate based upon the general size of companies (market capitalization), and the style of investment (growth, value or core).  The purpose of hiring a variety of managers is to give the Equity Fund broad diversification, and to limit the risk of the portfolio.  The Equity Fund has a long-term objective of generating capital appreciation for the North Carolina Retirement System.  While the Fund is continually monitored by the Investment Division in order to ensure compliance with risk parameters and investment policies, the returns are evaluated over more meaningful three to five year time periods.

Definitions:

Active Manager: an investment manager who conducts qualitative and/or quantitative research into public companies and selects stocks that meet the manager’s investment criteria.

Passive Manager: an investment manager who replicates the securities contained in an investment index.

Market Capitalization:  the size of a public company based upon the price of its stock and the number of shares outstanding.  Generally, large capitalization stocks have a market capitalization in excess of $20 billion; mid capitalization stocks have a market capitalization of between $1 billion and $20 billion and; small capitalization stocks have a market capitalization of under $1 billion.

Growth Style: an investment manager employing a growth style will generally emphasize increasing or accelerating profits or other measures of growth in selecting stocks.

Value Style: an investment manager employing a value style will generally emphasize companies that appear to be inexpensive based upon a low multiple of earnings to the price of the stock.

Core Style: an investment manager employing a combination of growth and value disciplines in selecting stocks.

Benchmark: an index consisting of a representative sample of stocks that provide a reasonably objective measure of the performance and risk characteristics of a particular segment of the stock market.   Various organizations have developed and refined benchmarks for purposes of evaluating equity performance.  In evaluating equity managers, the Investment Division has traditionally worked with benchmarks provided by Standard and Poors, Frank Russell and Associates and Morgan Stanley Capital International organizations that are well recognized for their development of indexes.

Individual Equity Manager Performance

An Explanation of Performance

Stock Holdings

*Holdings are released at fiscal year end

Equity managers seeking to do business with the North Carolina Department of State Treasurer should have their data published within the Mobius M-Search database. The State Treasurer uses the service to pre-screen equity managers depending on the particular mandate that is being considered.

http://www.checkfreeinvsvcs.com/msearch/