David Deutsch likes to rock and roll. He's been playing guitar since the age of 11, inspired by role models like Elvis and his own cousin, blues guitarist Mike Bloomfield. Deutsch eventually turned his passion to investing, but his penchant for pumping up the volume found an ideal outlet when the chief investment officer position became available at the San Diego County Employees Retirement Association in 2003.
"I wanted San Diego because of what it is -- a progressive fund with a high profile and a great reputation for innovation and doing things right," says Deutsch, 60, who was CEO of the Kern County Employees' Retirement Association in Bakersfield, California, for ten years before being hired as CIO in February 2004.
San Diego County, which over the past decade has been the top-performing retirement fund among U.S. public pension plans with $1 billion or more in assets, has long been known for its culture of creativity. When Deutsch took the helm, he inherited a portfolio packed with provocative investments: six single-manager hedge funds, 40 private equity partnerships, commodities, managed futures and currency and policy overlays.
The hedge funds are wrapped in what Deutsch calls an "alpha engine," San Diego County's version of a portable alpha strategy. Created in 1998 by then-CIO Robert Snigaroff, the alpha engine uses swap contracts on the Standard & Poor's 500 index to replicate the U.S. stock market return, to which the county adds the alpha, or excess return, generated by its hedge fund managers. For the five years ended September 30, 2005, the alpha engine roared, delivering an annualized return of 5.23 percent, while the S&P 500 index sputtered, returning an annualized 1.48 percent during the same period.
With the guidance of Norwalk, Connecticutbased consulting firm Rocaton Investment Advisors, Deutsch has upgraded San Diego County's alpha engine. In his first 18 months on the job, he hired three multistrategy hedge funds -- New York's D.E. Shaw & Co. and Greenwich, Connecticutbased Silver Point Capital and Amaranth Advisors -- as well as Berens Capital Management, a New York emerging-markets fund of hedge funds. He also terminated one hedge fund manager and three U.S large-cap equity managers and is replacing the fund's longtime custodian, Bank of New York.
The retirement fund now invests in nine hedge fund strategies. "We're not done by a long shot," says Deutsch, who continues to search for ways to add excess return with low correlation to the markets, greater efficiency and low volatility. As of September 30, 2005, the county had $1.3 billion in hedge funds, about one fifth of its $6.8 billion in assets. By contrast, Sacramento-based California Public Employees' Retirement System, despite the ballyhoo surrounding its program, has allocated just $2 billion of its $200 billion in assets to hedge funds.
"San Diego's allocation to hedge funds puts it in the same class as some of the most sophisticated investors in the U.S. -- namely, endowments," says Neil Rue, a consultant in the Portland, Oregon, office of Pension Consulting Alliance. A typical big university endowment has 20 to 25 percent of its investments in hedge funds, says Rue.
Deutsch isn't stopping there. He has created what is in essence his own proprietary trading desk through San Diego County's relationship with WG Trading Co. The Greenwich, Connecticutbased broker-dealer does index arbitrage for the pension fund, eliminating the costly performance fees the county would incur were it to pursue such a strategy using a hedge fund. San Diego's partnership with WG is part of Deutsch's master plan to separate alpha and beta to increase his investment choices.
"One of the things they're doing well is thinking in a more disciplined way about what drives returns," says Robert Prince, co-CIO of Bridgewater Associates, a Westport, Connecticut, money management firm with $142 billion in assets, including about $19 billion in hedge funds. "They think about hedge funds as having alpha and of it being interchangeable with the alpha of a traditional manager."
Deutsch uses Bridgewater, one of Snigaroff's original hedge fund investments, to generate alpha and beta. He invested about 5 percent of the pension fund in Bridgewater's All Weather beta strategy, which aims to achieve equitylike risk-adjusted returns without using equities.
San Diego County's investment performance has consistently placed it among the top public pension funds in the U.S. As of September 30, 2005, the county was the No. 1ranked public fund for one, three and ten years in the Trust Universe Comparison Service of plans with $1 billion or more in assets. For those periods it had annualized returns of 20.1 percent, 19.9 percent and 10.3 percent, respectively.
Deutsch and his four-person investment staff don't toil in a vacuum. They are hired by and work for a nine-member retirement board that includes four county employees or retirees and four appointees of the San Diego County Board of Supervisors. "The challenge for any public fund is to keep its trustees well informed and prepared for any performance dip, so that it can achieve the long-term payoff of a well-managed program," says Jim McKee, director of hedge fund research at Callan Associates in San Francisco.
The only popularly elected member on the board is Dan McAllister, treasurer of San Diego County, which is roughly the size of Connecticut. A former stockbroker, McAllister worries that the pension fund may be taking on too much risk in its effort to reach the 8.25 percent assumed rate of return needed to meet its liabilities. "The investment staff is forced to look under rocks that have never been turned over before for opportunities to invest our dollars," he frets.
Adding to McAllister's concerns is the county fund's proximity to the San Diego City Employees' Retirement System, whose offices are less than half a mile across town. San Diego city officials and some of the city retirement system board members have allegedly created problems recently by voting themselves raises, piling on extra benefits -- for themselves as well as for present and future retirees -- and taking a long pension funding holiday (see box). Deutsch and other county officials are quick to point out that there is no connection between the two pension offices or their investments.
Despite the best efforts of Deutsch and his staff, the San Diego County pension fund is subject to the same market factors that buffet other public funds: bear markets and the constant upward pressure on employee retirement benefits. The county's funding ratio -- the market value of plan assets divided by the present value of its projected benefit obligations -- has fallen to 80 percent, as the plan's unfunded liability has swelled to $1.2 billion. That compares with an average funding ratio of 83 percent for 64 state pension plans surveyed by Wilshire Associates in a March 2005 report. San Diego's ratio would be even worse if the county hadn't floated pension obligation bonds in 2002 and 2004 to cover part of its unfunded liability.
DAVID DEUTSCH IS A COMPACT MAN, BORN AND raised in Chicago to a family steeped in the arts and academia. His father was an English literature professor with a love of poetry; his mother sang with the St. Louis Metropolitan Opera before marrying and raising a family. Deutsch picked up his first guitar in 1956 while visiting his father, who had moved to Los Angeles after separating from his mother. Two years later his cousin, Mike Bloomfield, then 15, invited Deutsch, 13, to play his first gig at a local high school. It was "$5 a man," says Deutsch. The boys were driven back and forth by Bloomfield's mother.
While Bloomfield went on to record with the Paul Butterfield Blues Band, Electric Flag, Stephen Stills and Al Kooper, Deutsch moved to Los Angeles to enroll at the University of Southern California, where his father taught. After graduating summa cum laude and Phi Beta Kappa in 1967 with a BA in philosophy, he headed back to Chicago to attend medical school at Northwestern University. The intellectual rigor may have suited him, but the patient interaction did not, and Deutsch dropped out during his third year. While he was still in school, he landed a job playing guitar in the original community theater production of the musical Grease. Deutsch says he was picked because he could handle the Chuck Berry riffs better than the other musicians who auditioned.
In 1984, after moving to El Paso, where his wife taught history at the local campus of the University of Texas, Deutsch began working at a small investment advisory firm. In 1989 he was hired by the city to set up a new department to administer two pension funds, one for general employees, the other for firemen and police. He received his MBA from the University of Texas in 1990. Following a divorce and second marriage, Deutsch moved to Bakersfield in 1994 to take over as CEO of the Kern County employee pension plan.
When Deutsch arrived at Kern County, there was no CIO or investment staff. The board made all the investment decisions with the assistance of Santa Monica, Californiabased Wilshire Associates. Deutsch visited managers as part of the due diligence process and presented finalists he felt would perform well, but it was the board's decision to pick a manager after a dog and pony show with three finalists at a public session.
Deutsch bided his time in Bakersfield for ten years -- "a little longer than I ever planned," he says. But he had his sights set on bigger things. To help get there, he became actively involved with public pension organizations, such as the California Association of Public Retirement Systems and the State Association of County Retirement Systems, which serves 20 California counties that run their own pension funds under the County Employees' Retirement Law of 1937. Deutsch has taught a three-hour session on asset allocation and other investment basics at CALAPRS's annual springtime meeting for eight years. He also brings his acoustic guitar to the meetings to lead a night of sing-alongs with Tony Petruzzi, executive secretary to the board of trustees at the San Luis Obispo County Pension Trust, at his side also playing guitar.
One of the seminal points in Deutsch's investment evolution came in 1994, when he met Jim Carder, CEO of Santa Barbara, Californiabased Westridge Capital Management, who introduced him to synthetic overlays and S&P enhancement techniques. Although he lacked the staff to implement these strategies directly, Deutsch was able to hire several S&P enhancement managers, including Pimco StocksPlus. Toward the end of his tenure at Kern, Deutsch was given the authority by the board to pick managers. "Kern's giving discretion to a CEO, an administrator, was a big deal," says Deutsch. "At that point San Diego was a natural for me."
At Kern County, which had roughly $2 billion in investments when he left in 2004, Deutsch was his own boss. He says he was willing to adjust to having a boss again -- Deutsch reports to CEO Brian White -- to get the opportunity and the resources to implement more-cutting-edge strategies. One of the things that attracted Deutsch to San Diego was its alpha engine, which he had wanted to build at Kern County but hadn't had the personnel to do so.
San Diego County had the staff -- three seasoned investment professionals with a keen desire to meet the high standards of their new investment chief. "Because we're looking to be innovative, we're usually ahead of the curve," says Deutsch's No. 2, assistant CIO Lisa Needle. A chartered financial analyst, Needle was hired by former CIO Snigaroff in 1999 while she was getting an MBA from San Diego State University. Also on board are John Colafrancesco, who had specialized in doing business valuations for San Diego firms Foster Associates and Deloitte & Touche before joining the fund in 1998 to run its private equity, venture capital and real estate portfolios, and fixed-income manager Merrill Roach, a former budget analyst in the county health services division. In March 2005, Deutsch hired Brian Johnson, formerly a consultant with Wilshire Associates, to free up Needle to pursue new ideas. Johnson helps with the alpha engine, the commodities portfolio, domestic and international equities and manager selection and monitoring.
Deutsch says the traditional notion of asset allocation has lost its luster in a world of low- to mid-single-digit equity returns because it depends entirely on the excess returns from equities compensating for the extra risk of investing in them.
"The whole idea of diversifying among asset classes loses its meaning if you don't have a good feeling about the equity risk premium," Deutsch explains. He argues that the best direction today is to use absolute-return strategies to create a separate alpha portfolio, which is not tied to any particular asset class, while simultaneously building a better beta portfolio.
IT'S A CLEAR, SUNNY, 70-DEGREE NOVEMBER DAY in San Diego, and the sparkling harbor view from Deutsch's spacious office on the 14th floor of a glass-clad downtown office building is picture-perfect. Deutsch, however, is in a conference room down the hall, enjoying a bit of banter with three members of his investment team.
"Portable alpha is the hottest thing around," says Deutsch.
"And you're at every conference plugging it," shoots back Needle, who has come into the office for a few hours from maternity leave.
"Yeah, right," Deutsch agrees. "I've got to think of something new."
Soon enough, however, the mood turns serious. "When it comes to investing, we have a preference for doing it in-house," says Needle, whose duties at the fund include asset allocation, portfolio rebalancing, risk management, new-strategy research and manager selection.
Colafrancesco and Johnson are seated alongside Needle as Deutsch recounts a presentation on collateralized debt obligations he heard at a recent meeting of the State Association of County Retirement Systems.
"It was all about packaging and slicing and dicing credits," he says. "Well, you know, if you can do some of that in-house, you can save some of the costs. There's too much packaging in the investment world, too much sizzle and not enough meat. We just want the meat."
Deutsch and his team would not be doing what they are doing today were it not for Paul Boland, who was San Diego County treasurer from 1987 to 1998 and the driving force behind the retirement fund's foray into alternative investments. In his first few years in office, Boland was responsible for overseeing the pension fund's investments as well as the county treasury funds. "Paul was an investment zealot," says San Diego County pension plan board member Laura DeMarco.
Boland set the gears in motion for San Diego's alpha engine when he hired Richard Rose as the first CIO in September 1993. Despite the fear that permeated the California investment community after the derivatives-induced bankruptcy of neighboring Orange County in 1994, Rose was able to persuade the San Diego County retirement board to permit the use of derivatives in building a managed-futures program. "We'd sit around the table arguing until 7:00 or 8:00 at night, then go out and have a beer," says retiree James Feeley, the county's longest-serving board member, now in his eighth three-year term.
In 1994, to boost fund assets, the county floated the first of three pension obligation bonds, raising $430 million. "The money came to the fund at a propitious time, because it had all of the '90s to double and redouble," says San Diego County pension fund CEO White, who was hired by Boland in 1996. "It provided a laboratory for guys like Paul Boland and Rich Rose and other trustees to look at other things to do."
In 1996, Rose hired the county's first absolute-return manager, Chicago-based Lotsoff Capital Management, to run a fixed-income hedge fund strategy and started the currency overlay program. The county's pension fund doubled, from $1.6 billion to $3.2 billion, during his tenure. Pension staff and trustees received a jolt when, in October 1997, Rose was accused of shoplifting items from the gift shop of a hotel in Scottsdale, Arizona, where he was attending a conference. His widow, Caitlin Rother, says the incident was a result of alcoholism, a condition he tried to keep under wraps. Rather than go into treatment while retaining his job, Rose resigned, and the board promoted his second-in-command, Snigaroff, to CIO. A year later Rose committed suicide.
Like Deutsch, Snigaroff was originally drawn to the county fund because of its reputation for innovation. "I knew it would be fun to work there," says the 43-year-old Alaska native, who was an assistant investment officer at the Alaska Permanent Fund Corp. before heading south to San Diego. In his three years as CIO, Snigaroff expanded the investment staff and then set out to create the alpha engine. With help from consulting firm Alan D. Biller & Associates in Palo Alto, California, Snigaroff and his team lined up five market-neutral funds: Bridgewater, Freeman Associates Investment Management, Numeric Investors, Salus Capital Management and Zazove Associates.
"We hired them all in one day," says Snigaroff. "It was a great meeting."
To monitor what was then a $400 million hedge fund allocation -- at the time, almost 11 percent of the pension fund's $3.7 billion in assets -- Snigaroff established a prime brokerage relationship with Morgan Stanley in July 1999. Morgan Stanley reports directly to the pension fund, providing online, real-time information while sending hard copy and electronic feeds to the fund's longtime custodial bank, Bank of New York, which Deutsch is replacing with Pittsburgh-based Mellon Financial Corp. As a result, San Diego County can track its risk exposure as it is unfolding and centralize its risk reporting.
Snigaroff left the pension fund in January 2001 to found Denali Advisors, a San Diego investment firm that manages $750 million in equity-based, value-driven quantitative strategies. That summer the retirement board hired Jerry Woodham to replace him. Woodham had managed money for two Missouri endowments, those of Washington University and St. Louis University, and says he considered adding hedge fund managers to the alpha engine. But he returned to St. Louis to join investing consulting firm Hammond Associates in late 2003 before he could do so.
By the time Deutsch arrived in February 2004, the retirement board itself had experienced unusual turnover. The problems at the San Diego city pension fund had heightened the fiduciary concerns at the county fund, and the county board of supervisors had begun looking for pension board members with financial backgrounds, like DeMarco, who had been co-head of marketing and client services at San Diego investment firm Nicholas-Applegate Capital Management. The board confronted Deutsch early on about the fund's large number of managers.
"The board had a right to be skeptical, because they're fiduciaries," says Deutsch, who was being held accountable for a program he didn't create. "But it made it harder for me than if it had been the same old board." Deutsch thinks that his outspoken, aggressive style added some pressure during the adjustment period.
Before long Deutsch was firmly at the controls of the alpha engine, with consulting firm Rocaton as his co-pilot, and he set out to expand it. "Building upon the foundation of many years ago, we sought to add in new strategies to the alpha portfolio," says Rocaton partner Christopher Cesare. Rocaton suggested that the plan go with multistrategy funds rather than funds of funds or single-manager funds because it is a very efficient way to gather alpha. The firm recommends multistrategy funds to many of its clients: Multistrategy funds enjoy some of the same diversification benefits as funds of funds but are able to reallocate assets much more quickly among different strategies. "In addition," says Cesare, "multistrategy firms provide a lower cost structure than a traditional fund-of-funds program."
Once the decision was made to go with multistrategy funds, Deutsch and Needle used Rocaton's research to narrow the universe to eight potential managers, each of which they visited in separate half-day meetings. It was a difficult decision, says Deutsch, who decided to go with three funds. The board approved the first, Silver Point, a $4 billion hedge fund firm specializing in credit strategies, in June 2005. The following month it approved the other two, Amaranth and D.E. Shaw. Needle says Amaranth, with $6 billion in assets under management, has a broad base of globally focused, diversified strategies, while the academically oriented quant shop Shaw, with $17.3 billion in assets, has unparalleled research.
Deutsch had also begun questioning the relevance of looking for alpha from traditional large-cap managers, which he says are chained to their style boxes. The decision was made to terminate two. A $200 million account run by Snigaroff's Denali Advisors was among the victims.
"The irony is that Bob created the alpha engine and it came and ate his lunch," says Deutsch.
Snigaroff accepts the decision with equanimity, although he questions the logic behind it. "We can't all get rich managing one another's hedge funds. How much alpha is there?" he asks. "Not as much as the hedge fund world would like you to believe."
Deutsch has been equally bold with hedge fund managers. In June 2005 he fired Salus Capital, a $1.1 billion market-neutral manager in Los Angeles, and divided the $90 million it was managing for San Diego among his new multistrategy funds.
"From a risk-return and diversification perspective, Salus couldn't provide anything for the alpha engine that the remaining market-neutral strategies couldn't provide better," says Deutsch. Salus president Brad Ebner, who says he delivered 2.5 to 3 percent of alpha annually in the five-year period ended June 2005, appeared at a board meeting last summer to defend his strategy. Says Deutsch: "I don't care how smart these guys are. If Lisa Needle and David Deutsch agree that a manager is of no use, you can be confident they are of no use."
Like most public retirement funds, San Diego County is cost-conscious when it comes to fees. As a rule, Deutsch and his team avoid investing in funds of hedge funds because of the added layer of fees. They made an exception last September for Berens Capital Management, a $440 million New York fund-of-funds firm specializing in emerging-markets managers. San Diego County has invested $20 million with Berens, not as part of its alpha engine but as a substitute for its long-only emerging-markets allocation.
The pension plan has aggressively negotiated the management fees it pays its single-manager hedge funds. Today they range from a high of 40 basis points for Freeman Associates in nearby Rancho Sante Fe, California, to 0 percent for convertible bond manager Zazove Associates. Zazove, which is based in Incline Village, Nevada, charges a 25 percent performance fee; Freeman, 20 percent.
Deutsch has lowered the cost structure for San Diego County's alpha engine through its relationship with WG Trading, the broker-dealer affiliate of Santa Barbarabased Westridge Capital. Like a proprietary trading desk at an investment bank, WG trades S&P 500 index futures against S&P 500 baskets of stocks for San Diego in a risk-free arbitrage. The pension fund pays WG a management fee of 50 basis points but no performance fee.
ALTHOUGH DEUTSCH AND HIS predecessors invest to earn top returns, pension assets will always be vulnerable to external forces. In March 2002, despite the thenbear market, San Diego County enhanced the benefits it pays its workers as part of a five-year contract with local union bargaining units, which represented three quarters of the 16,836 active county employees. As a result, the pension liability swelled to $1.1 billion and the county floated a $737 million pension obligation bond in 2002, $550 million of which went into the retirement fund to pay for the enhanced benefits. The rest was used to pay off the 1994 bond. In June 2004 the county issued an additional $450 million bond to get its liability funding, which had dropped to 75 percent, back to 80 percent.
The nearly $1.3 billion in bond debt and $1.2 billion pension liability cast a long shadow over the pension fund's board, which meets once a month to discuss investments. At the December meeting longtime board member Feeley suggested that board members accompany Deutsch on due diligence visits to managers. Years ago, when Boland served as the county's treasurer, pension administrator and trustee, he actively encouraged fellow trustees to come with him on manager visits for the educational experience. That was then, however, and now trustees don't expect to micromanage pension staff.
"We can defer to the expertise of the experts," says county treasurer McAllister. "David has at this point not disappointed. He is out to implement the wishes of the board."
That doesn't mean that the investment decisions of the pension fund staff don't keep trustees awake some nights. McAllister, whose two-year stint as retirement board chairman ended in July 2005 but who still serves as the only trustee elected by the voters of San Diego, makes what he calls his "Warren Buffett" argument: If an investment is too complex for board members to understand or explain fully, the pension fund probably ought to reconsider whether to be in it.
"Even pretty well educated people would have a difficult time explaining the alpha engine to a judge and jury," says McAllister.
But for now McAllister and the other board members will defer to their pension staff, knowing that part of being a fiduciary is delegating complex tasks to qualified experts. Says Deutsch: "The board has the power to ratify, not approve or disapprove. The presumption is, we've done our homework."
In the short term Deutsch and his team are looking for strong, efficient absolute-return strategies to add to the hedge funds in the alpha engine. Also on his to-do list: educating -- and persuading -- the board to think about alpha in a new way. Gone would be the traditional method of constructing an investment portfolio by asset class. In Deutsch's brave new world, the portfolio would be divided according to generators of alpha and beta. Deutsch has already made the first moves in that direction by eliminating the fund's large-cap managers in favor of the three multistrategy managers. It would also entail a move away from the idea of "porting," or tying excess returns to one particular asset class, the method currently in vogue. Deutsch reasons that this will expand the breadth of choices among investment strategies and managers.
Much further out on the horizon, Deutsch envisions a new kind of tactical asset allocation model driven by state-of-the-art software, in which alpha and beta are manipulated as market conditions dictate rather than by the current practice of adjusting asset classes. "We can get there, but we've got to spend 40 years in the desert," says Deutsch, who thinks the pension fund will be able to do it in-house. "It's a whole other dimension of decision making."
A more tangible change will take place this summer when the pension offices leave the city and head north to Mission Valley, the home of suburban sprawl, giant shopping centers and Qualcomm Stadium. There are any number of reasons why the 65 pension employees are leaving the city center: a cost-conscious retirement board looking to own rather than rent, expanded office and boardroom space, the dearth and expense of parking downtown and Mission Valley's proximity to the fund's members. Still, it just so happens that getting out of town will move the county fund that much farther away from its benighted cousin, the San Diego City Employees' Retirement System.
Despite the new digs, Deutsch's daily routine won't change. As he has done for many years, he will begin the day with a half hour or more of guitar licks before heading into the office to look for investment strategies that will keep his fund above water -- and ahead of the pack.
Keeping cool under fire
Amid swirling accusations of fiduciary malfeasance at the San Diego City Employees' Retirement System sits Doug McCalla, a placid man doing a slow boil. McCalla, who has put up top returns since becoming CIO in 1993, can't quite understand why his fund has garnered so much criticism and media attention.
"We are the most heavily audited and reviewed pension fund system in the country," he complains. "A local political phenomenon has been made the poster child for excessive benefits."
The troubles at the San Diego pension fund began in 2003, when it came to light that a deal struck in 1996 and modified in 2002 freed the city from making a large pension contribution and concurrently gave municipal employees richer pension benefits. McCalla, 56, confirms that the Securities and Exchange Commission is investigating the city's financial reporting related to its debt offerings -- none of which, he says, has anything to do with the pension plan.
On January 6, a federal grand jury handed down criminal indictments against five current and former city pension officials. Standard & Poor's had suspended San Diego's credit rating in September 2004, making it difficult for the city to issue a pension obligation bond to alleviate its $1.37 billion in unfunded liabilities.
As a result, managing pension money in San Diego, the seventh-largest city in the U.S. by population, has gotten a whole lot harder. McCalla oversees close to $4 billion. He delivered a 15.6 percent return for the 12 months ended September 30, 2005. The San Diego city fund has average annualized returns of 17.7 percent and 10.3 percent, respectively, for the three- and ten-year periods ended September 2005, putting it in the top decile of public pension funds, according to San Franciscobased Callan Associates.
McCalla runs a tight ship, investing conservatively. He puts 38 percent of the fund's assets into equities, compared with about 46 percent for the average public fund, according to Callan. Like his counterparts at the San Diego County Employees Retirement Association (story), McCalla was among the first public pension CIOs to allocate money to hedge funds. In 1998 he invested $80 million, or 3.2 percent of the plan, in a market-neutral fund run by Los Angelesbased Salus Capital Management.
McCalla has since added two managers to the pension plan's market-neutral portfolio, which has burgeoned to 9.6 percent of assets. Unlike San Diego County CIO David Deutsch, McCalla sees market-neutral funds as a replacement for bonds and uses them to reduce the volatility of his fixed-income investments.
McCalla, a San Diego native, is quick to point out that the county pension fund has had four CIOs in the time that he has held the city's top investment job. In fact, he has been involved with the city pension fund since 1988, first as a trustee and then in 1991 as an investment analyst before becoming CIO two years later.
Back when Richard Rose was running the county pension fund, McCalla would get together with him to share ideas and information. Eventually, says McCalla, the fund operations were so dissimilar that "other than talking about managers, there wasn't a lot of benefit." For now the two funds are eyeing each other warily, keeping their distance and emphasizing their differences. -- F.D.