State treasurer invests $1.2b with minority-owned businesses

Howard Manly

Since his election in 2003 as state Treasurer, Tim Cahill has enabled minority and women-owned firms to invest $1.2 billion of the state’s pension fund.

Though the state has a total fund of $39.2 billion in its pension fund, the amount to minority and women-owned firms is the most in the history of the state, and it is more than likely the first time the state has invested with minorities.

“We’ve opened the door wider,” Cahill said in an interview. “We have let people in who have never gotten through the gates… and not the same old Wall Street firms.”

Among those let in are Ariel Capital management, an African American-owned firm in Chicago managing $250 million for the state in a domestic small cap stock portfolio; Seix Investment Advisers, a woman-owned firm in New jersey managing $625 million in a high yield fixed income portfolio; and Rock Creek Advisers, a woman-owned firm in Washington, D.C. managing $376 million in a hedge fund portfolio.

In addition to the state investment portfolio, Cahill said the state has $125 million in an economically targeted investment program.

Investing some of that pool of money is Canyon Johnson, Magic Johnson’s firm in Los Angeles that is managing $20 million in an urban revitalization fund.

Another group is the New Boston Fund. While not minority-owned, Boston developer Kirk Sykes is a principal in the firm now managing about $10 million. The New Boston Fund has been designated as developer of the former Boston State Hospital site in Mattapan.

Access Capital is another firm that is not minority-owned but has Boston businessman Ron Homer as a principal. The firm manages about $75 million in a state-only mortgage fund.

Cahill said that it’s too early to tell how these funds and their managers will perform, explaining that between seven and ten years are needed to allow the investments to grow. But Cahill said he is not worried.

“What we have learned throughout this entire process is that there is a lot of unmet need in the urban areas,” Cahill said. “There’s also a lot of money to be made in these communities and we are making that effort to invest with companies that no one in the state has done. And its already making rewards.”