Key Takeaways
- • Oklahoma's Invest in Oklahoma Board is considering outsourcing management of the state's $200 million sovereign wealth fund to an outsourced chief investment officer (OCIO), with the goal of growing the fund to $1 billion by 2036, according to The Journal Record.
- • Ten firms responded to the board's July request for proposals, and only one, MEMCO (Multilateral Endowment Management Company), is based in Oklahoma.
- • Denver-based Innovest scored highest with the office of State Treasurer Todd Russ, which weighted DEI, ESG, and in-state investment factors in its scoring.
- • The board voted to invite all 10 firms to present, with Gov. Kevin Stitt stressing a preference for face-to-face scrutiny of firms' commitment to Oklahoma projects.
Summary
Oklahoma is choosing to outsource management of its $200 million sovereign wealth fund rather than run it with an internal investment team. The Invest in Oklahoma Board, the public body responsible for the fund, convened Monday to discuss and act on the selection of an outsourced chief investment officer tasked with growing the fund to $1 billion by 2036, according to The Journal Record. Gov. Kevin Stitt chairs the board, whose members include Lt. Gov. Matt Pinnell, State Treasurer Todd Russ and two legislative appointees.
The Journal Record reports that established sovereign wealth funds typically rely on internal executives, while outsourced CIO arrangements are more common among midsize foundations, endowments and corporate pensions that lack internal investment teams. In July, the board issued a request for proposals for OCIO services, drawing 10 responses: one from Switzerland, six from east of the Mississippi River, one from Denver and one from Seattle. Only MEMCO, a nonprofit established in 2019 by the Oklahoma State University Foundation and serving the foundation and affiliated and unaffiliated charitable endowments, is based in Oklahoma. Ryan Harms, who previously worked on the foundation's investment team, is now MEMCO's chief investment officer.
Russ's office scored the firms on adherence to policy and value criteria, including whether they incorporate diversity, equity and inclusion or environmental, social and governance factors, as well as on their existing Oklahoma investments and likely attention to the state's fund. Denver-based Innovest scored highest, despite MEMCO's local appeal; Innovest already serves as investment consultant to the Tobacco Settlement Endowment Trust Board of Investors, which Russ chairs. The full ranking, by score, is Innovest, Cambridge Associates, Cerity Partners, Russell Investments, Aon, PNYX, FEG Investment Advisors, MEMCO, NEPC and Goldman Sachs Asset Management.
Stitt said he wants to meet prospective managers in person to confirm they will not dismiss Oklahoma projects, and he referenced a 2023 executive order prohibiting state agencies from using state funds to support DEI positions, activities and programs. The article notes a state law requiring divestment from companies hostile to oil and gas was deemed unconstitutional. At the close of the meeting, Russ recommended that all 10 firms present to the board, and the board adopted that recommendation.
The Journal Record reports that established sovereign wealth funds typically rely on internal executives, while outsourced CIO arrangements are more common among midsize foundations, endowments and corporate pensions that lack internal investment teams. In July, the board issued a request for proposals for OCIO services, drawing 10 responses: one from Switzerland, six from east of the Mississippi River, one from Denver and one from Seattle. Only MEMCO, a nonprofit established in 2019 by the Oklahoma State University Foundation and serving the foundation and affiliated and unaffiliated charitable endowments, is based in Oklahoma. Ryan Harms, who previously worked on the foundation's investment team, is now MEMCO's chief investment officer.
Russ's office scored the firms on adherence to policy and value criteria, including whether they incorporate diversity, equity and inclusion or environmental, social and governance factors, as well as on their existing Oklahoma investments and likely attention to the state's fund. Denver-based Innovest scored highest, despite MEMCO's local appeal; Innovest already serves as investment consultant to the Tobacco Settlement Endowment Trust Board of Investors, which Russ chairs. The full ranking, by score, is Innovest, Cambridge Associates, Cerity Partners, Russell Investments, Aon, PNYX, FEG Investment Advisors, MEMCO, NEPC and Goldman Sachs Asset Management.
Stitt said he wants to meet prospective managers in person to confirm they will not dismiss Oklahoma projects, and he referenced a 2023 executive order prohibiting state agencies from using state funds to support DEI positions, activities and programs. The article notes a state law requiring divestment from companies hostile to oil and gas was deemed unconstitutional. At the close of the meeting, Russ recommended that all 10 firms present to the board, and the board adopted that recommendation.
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