Sam Masoudi Gets Wyoming Pension Plans on Balanced Footing

Since arriving at the Wyoming Retirement System in late 2013, the CIO has worked to get the Equality State’s pension house in order.


Since the global financial crisis in 2008–’09 ripped a big hole in the investment portfolios of public pension funds — by an average of 19 percent — there have been numerous and continuing reports of how these funds are going to ruin the U.S. economy and need to be replaced entirely by self-directed retirement plans. The main culprit in the funds’ woes in this scenario: Some of these funds do not currently have enough assets to cover future liabilities — the deferred compensation payments due retirees. It was much more than the crisis that wrecked those funds, though.

A good part of the problem is because for years employers have not funded their plans properly, a practice that started in force with so-called contribution holidays during the bull market years of double-digit investment returns through the late 1990s. In some states, legislators even borrowed pension assets held in trust by their state, without replacing them, causing losses that are difficult to make up.

Today state pension funding ratios range from a low of 47.7 percent in Illinois to Wisconsin’s and South Dakota’s 100 percent funding, not unexpected in states that have long made their promised pension contributions.

But how have smaller pension plans been fairing in states that don’t grab frequent headlines? In each state, there are investment professionals who believe in the defined benefit system of providing retirement security and are working hard to ensure that state employees have their promised pension to retire on after a full career.

In late 2013, when Sam Masoudi took on the CIO role at the Wyoming Retirement System in Cheyenne, he was only the third person to hold that position and one of the only investment team members with previous manager selection experience. A Denver native, Masoudi had been living in New York since 1993, working in asset management until 2008, when he began working in the Darien, Connecticut–based office of the Tulane University endowment fund.

When he arrived in Cheyenne, Masoudi brought the investment team head count to four; the other three professionals had been in place only 18 months. “There wasn’t enough redundancy if someone left,” says the CIO, who is about to make his second hire, another senior investment officer, which will raise the number to six. The 2017 budget includes lines for one more senior and a junior staff member, for a total of eight. “We’re thankful the governor and state legislature have been so supportive,” says Masoudi, pointing to tight budget constraints in a state dependent on coal, oil and gas, which have been hit by prolonged price declines. “As it gets harder and harder to make actuarial returns, governing bodies are realizing they need to have larger, more talented investment teams to build the more complex portfolios that are needed to increase the chances that we’ll achieve the actuarial return.”


Wyoming maintains a 7.75 percent discount rate, or actuarial rate, of return. That is average for U.S. state pension plans, down from 8 percent following the late-2000s financial crisis, according to the National Association of State Retirement Administrators in Lexington, Kentucky. To help get there, the once 30 percent allocation to fixed income was halved, whereas global equity weighs in at 55 percent, with an overweight to emerging markets. Private equity is 12 percent, marketable alternatives are 15.5 percent, and there is a 2.5 percent allocation to cash. NASRA’s Public Fund Survey of 96 funds in fiscal year 2014 puts Wyoming above the 50 percent average in equities and the 17 percent allocation to private equity and hedge funds, and below the 23 percent average allocation in fixed income.

Masoudi, who has worked in real estate investment banking, private equity and investing a long-short equity hedge fund for Silver Peak Capital Management in New York, reports to a joint appropriations committee of the state legislature that meets only two months a year and has given the CIO delegated asset management authority. Of the nearly 585,000 state residents, a full 80,000, or 14.5 percent, are members or beneficiaries of the state pension plan. That is the highest number of noneducation state and local workers per capita, according to the 2011 U.S. Census survey, followed by Alaska and New York. Wyoming, known as the Equality State for being first to give women the vote, also has the smallest population of any state and is second-lowest in population density after Alaska.

Along with an investment portfolio that took a 35 percent hit during the financial crisis, Masoudi inherited an investment office that had been rocked by turnover and scandal. The system’s first CIO, Trent May, was brought onboard in 2009 after former Wyoming governor Dave Freudenthal sought to improve investment results. Up until then, the assets were managed by a consultant and a deputy director with part-time duties.

May continued the governor’s drive to professionalize the investment office, hiring senior investment officer John Johnson, who replaced him as CIO in 2011. Then, after only 18 months onboard, in early 2013 Johnson was forced out when the Southern District of New York slapped him with four counts of insider trading for actions he took in 2008, before coming to Wyoming. (He was sentenced last April to supervised release and community service; May and Freudenthal were not involved.)

Masoudi, who is working with a 79 percent funding ratio, down from its 2009 peak of 87.5 percent, is dedicated to building back state employee assets in the now $7.3 billion fund. “I love investing pension assets,” he says, “because you can focus on pure investing.” That contrasts with fund management: “I don’t like the sales aspect and the incentives to grow at all costs.”

This article is the first of a three-part series of profiles of heads of state retirement system investment offices.

Follow Frances Denmark on Twitter at @francesdenmark.

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