Patricia (Patty) French P: (505) 476-9300 Chair, Municipal Member F: (505) 476-9401 Wayne Propst Toll Free: Executive Director 1(800) 342-3422 Tuesday, June 28, 2016 Questions received in connection with the 2016 Illiquid Investment Consultant RFP QUESTION 1: Can you tell us the current consultant’s annual fee? ANSWER 1: PERA’s current fee structure is a flat annual rate of $1.9 million. According to CEM Benchmarking, Inc., PERA’s fee is 1.3bps above the U.S. median and 0.9bps above the U.S. average, thus one of the motivations for an RFP issuance. QUESTION 2: Can you provide specific dates of meetings the consultant would be expected to attend? ANSWER 2: PERA holds 1-2 meetings per month, typically scheduled on the second Tuesday and last Thursday of each month. The consultant will also be expected to attend onsite due diligence, and any board education sessions. QUESTIONS 3: What is the anticipated working relationship with the general consultant? ANSWER 3: PERA views its portfolio holistically, and expects its consultants to maintain a collaborative working relationship. QUESTION 4: Are the meeting requirements all onsite or can conference calls be acceptable? ANSWER 4: Onsite attendance is required for Board and Investment Committee meetings. QUESTION 5: How often will the consultant visit PERA onsite? ANSWER 5: Please refer to answer 2. QUESTION 6: How many (if any) co-investments do you anticipate PERA will make? 33 Plaza La Prensa, Santa Fe, NM 87507 Visit us at www.nmpera.org ANSWER 6: PERA does not currently participate in co-investment opportunities. QUESTION 7: What types of special projects will be completed by the consultant? ANSWER 7: The consultant will be expected to prepare educational materials, and ad-hoc reporting and presentations as requested by PERA. QUESTION 8: Is opportunistic credit a part of this RFP? ANSWER 8: Yes, illiquid credit-oriented fixed income is included in this RFP. QUESTION 9: What will be the expected involvement with legal negotiations, side letters, amendments, and closings? ANSWER 9: PERA relies on in-house and outside counsel for the matters above. However, we will seek the opinion of the consultant when necessary. Additionally, the consultant is required to review and opine on terms upon Board recommendation. QUESTION 10: Will the consultant be covering annual meetings for funds in the PERA portfolio? ANSWER 10: PERA expects to work collaboratively with the consultant to determine necessary annual meeting attendance. QUESTION 11: If a consultant is only responding to various illiquid investments or a specific category of illiquid investments how will the sub-sector allocations be determined? It appears based upon some of the requested responses that the consultant should make recommendations as to the specific allocations within the sub-sectors. Though sub-sector consultants can provide detail on return attribution and specifics for their individual sectors is it assumed that the general consultant and staff/board will provide targets for each sub-sector? ANSWER 11: Sub-sector allocations (i.e. venture capital within private equity) are determined by the PERA Board, upon recommendation from staff and general consultant. As part of the asset allocation study, PERA does request that the illiquid consultant collaborate with general consultant and staff to determine appropriate sub-sector allocations. 2 | Page QUESTIONS 12: Does NMPERA currently have risk/return targets/objectives for the illiquid investment classes (all sub-sectors)? If so, what are they? ANSWER 12: QUESTION 13: In order to gain a better understand of travel requirements, can you please provide a general expectation for the number of required physical meetings by the consultant? The RFP references monthly investment and board meetings, attendance as requested at Staff meetings to provide advice, and attend meetings related to investment manager searches and site visits. How many of these physical meetings did the current consultant attend in 2014 and 2015? ANSWER 13: PERA expects approximately 12-24 physical meetings with the PERA Board, per year. In fiscal year 2016, the PERA Board held 12 physical meetings. QUESTION 14: How many advisory board seats does NMPERA currently hold in real estate, timber, farmland, and infrastructure? ANSWER 14: PERA currently holds three advisory board seats within Real Estate and Real Assets. QUESTION 15: Included within Contractor warranties and representations is the following statement: “Contractor does not directly or indirectly own any investment managers, investments brokers, or investment banking services or directly or indirectly manage any pooled assets.” In the event that the Offeror does manage and act as a GP for fund of fund vehicles, would that disqualify the Offeror from acting as NMPERA’s illiquid investment consultant and participating in the consultant search process; or would it simply need to be disclosed prior to contract execution? 3 | Page ANSWER 15: Offerors will not be disqualified, however, PERA does require disclosure prior to contract executions. Additionally, per the stated minimum qualifications, revenues that are not derived from advisory/consulting services must not be more than 50% of total revenues. QUESTION 16: Are there any limits on file size for attachments? ANSWER 16: Yes, attachments larger than 10MB or within a zip files can’t be accepted by PERA. Respondents may submit their proposals through multiple emails, or through other electronic media devices. QUESTION 17: In Part II. Scope of work, Section B Common Components of Scope of Work and Deliverables, Section 3 Reporting and Monitoring of the Illiquid Assets Portfolio paragraph “a,” sub paragraph “v” on page 5. The state requests that the consultant provide peer benchmarks. Can the respondents receive an example of previous reports provided to the state? ANSWER 17: PERA currently utilizes TUCS universe and Cambridge peer benchmarking. QUESTION 18: In Part V. Submission Requirements, Section A. Method for Submission of Proposals on page 11. Due to the potential file size of the document and built in fire walls, can respondents send the document via a delivery service (i.e. LeapFile). Alternatively can respondents send multiple emails splitting the file into smaller sizes in order to avoid fire walls? ANSWER 18: Yes, PERA will accept submissions via a delivery service, as long as submission are in PERA’s possession by the submission deadline. QUESTION 19: In Part VII. Key Contractual Provisions on Page 14. Can respondents include potential changes to the listed provisions as an attachment? ANSWER 19: Yes. QUESTION 20: While it is stated that “All principal investment decisions are subject to approval by the Board” in the policy, does staff have any delegated authority (e.g. manager re-ups)? 4 | Page ANSWER 20: No. QUESTION 21: Within the strategic allocations for each asset class, are there sub asset class allocations for private equity, real estate, real assets, absolute return (e.g. how much allocated to venture, buyouts…)? ANSWER 21: Please refer to Attachment A. QUESTION 22: If the RFP is to rehire or replace your current general investment consultant, what prompted the search? Is the incumbent consulting firm allowed or encouraged to rebid? ANSWER 22: This RFP issuance is in line with PERA’s initiatives to better align services with costs. The incumbent consulting firm is allowed to submit a proposal. QUESTION 23: How long has the incumbent consultant been with your plan? ANSWER 23: The incumbent consultant has been with the plan since 2006. QUESTION 24: Do you anticipate making any changes to the asset allocation of the fund? Are you considering any new asset classes? ANSWER 24: PERA recently adopted a new Strategic Asset Allocation, and is in the process of implementation. Additional changes are not expected, at this time. QUESTION 25: What is the most important investment issue your fund is currently facing? ANSWER 25: PERA is currently focused on prudent and efficient implementation of the newly adopted Strategic Asset Allocation. QUESTION 26: Please provide a copy of your 2016 meeting schedule for the board meetings, the investment committee meetings, and the Annual Board Retreat in which the investment consultant would be expected to attend. Are the Board Meetings and Investment Committee meetings always on the same date and location? We note that in 2016 there were several “Special Board Meetings.” Would the consultant be expected to attend 5 | Page these as well? Are there any scheduled workshop dates that would involve the Illiquid Assets consultant in 2016? Were there any in 2015? ANSWER 26: Please refer to answer 2, additionally, PERA Board retreats typically occur annually, following a fiscal year end. Special Board meetings will be scheduled at the discretion of the Board. QUESTION 27: How many partnership annual meetings and advisory board meetings did your Consultant participate on your behalf in each of 2016 and 2015? ANSWER 27: Please refer to answer 10. QUESTION 28: What strategic decisions are currently pending with the current consultant that the new consultant would likely become involved with? ANSWER 28: Implementation of newly adopted Strategic Asset Allocation, and ongoing illiquid manager diligence. QUESTION 29: How many reviews of fund document amendments did your current consultant review on your behalf in 2016 and 2015? ANSWER 29: PERA expects a recommendation from its consultant on each amendment received. QUESTION 30: When was the last asset liability