The Pension Benefit Guaranty Corporation (PBGC) has a requirement for Active U.S. Real Estate Investment Trust (REIT) Equity Investment Management Services.

The Employee Retirement Income Security Act of 1974 (ERISA) established Pension Benefit Guaranty Corporation (PBGC) as a federal corporation to encourage the growth of defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum. Defined benefit pension plans promise to pay a specified monthly benefit at retirement, commonly based on salary and years on the job. PBGC, a wholly owned United States Government corporation, administers the insurance program and termination process for most private-sector defined benefit pension plans that are tax-qualified under the Internal Revenue Code. PBGC is headed by a Director who reports to a Board of Directors consisting of the Secretaries of Labor, Commerce, and Treasury, with the Secretary of Labor as Chairman. General tax revenues do not fund PBGC. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments, and receives the assets of the pension plans it terminates. PBGC manages all these assets under an investment policy approved by the Board of Directors. PBGC maintains two separate investment funds: the Revolving Fund and the Trust Fund. The Revolving Fund (valued at approximately $65 billion as of September 30, 2024) receives all premium payments and is invested solely in “book-entry” U.S. Government securities held at the U.S. Treasury. The Trust Fund (valued at approximately $67 billion) receives assets from terminated plans and is the source of funds related to this contract. The PBGC Investment Program is structured as a manager-of-managers program. No assets are managed internally. The PBGC exclusively uses institutional investment management firms to invest its assets, subject to PBGC’s oversight and consistent with the PBGC’s Investment Policy Statement.

• The purpose of this requirement is to provide active investment in REIT equities that performs on a risk adjusted basis in excess of a chosen benchmark, currently the FTSE Nareit Equity REITs Index. The portfolios will be 100% long only.
• The investment management organization retained under contract by PBGC is responsible for providing investment management of an REIT equity portfolio that is 100% long only. At PBGC’s sole discretion, allocations may range from $250-$500 million and may change at any time during the performance of the contract.
• The primary objective of this requirement is to obtain investment managers to manage the Corporation’s investment assets consistent with guidelines specified by the contract. The investment manager shall also be responsible for notifying PBGC of significant changes in personnel, ownership, resources, or firm direction within 10 business days of any said change.
  • Tasks:
    • Active Investment in REIT Equities
      • The firm shall demonstrate a repeatable investment process that can deliver strong risk adjusted returns in excess of the benchmark (the FTSE Nareit Equity REITs Index) on a go forward basis.
      • Components of the Active Investment in REIT Equities include:
        • 1) A sound investment philosophy and process for active investment in REIT equities that provides rationale for how the fund can outperform the index over the term of the contract.
        • 2) An investment process that is repeatable and utilizes reliable data sources. The investment process shall include research resources that support the investment philosophy. Liquidity country, sector and security constraints shall support the investment philosophy while mitigating unnecessary risk.
        • 3) Portfolio risk monitoring that will reduce the risk of underperformance due to unforeseen portfolio risks.
        • 4) Performance and attribution that reflect the stated goals and investment process that are described.
        • 5) Trading systems and resources that can ensure best execution given the proposed strategy and liquidity in the markets. Pre- and post-trade compliance processes shall reduce the risk of guideline breaches and unauthorized trades.
        • 6) Proxy voting and stewardship efforts that adhere to ERISA and ensure best value for plan participants.
        • 7) A robust team dedicated to the product to support the investment process. This includes researchers, portfolio managers, and traders. ? At least one member of the investment team shall have 5 years of experience investing in REIT equities with the firm.
        • 8) Middle/back-office and compliance departments to ensure compliance with regulations and reporting requirements.
        • 9) A client service team to assist with delivering reports and data, meeting requests, and to answer high level questions about the process, team, and firm.
        • 10) A parent firm with the ability to support the ongoing investment in REIT equities, including the ability to continue staffing the product and provide resources necessary for successful outperformance.
        • 11) An organization with no conflicts of interest with the successful investment and outperformance of PBGC’s assets as well as PBGC’s mission.
        • 12) An organization with few to no regulatory actions against them and that has the ability to comply with regulatory requirements and internal controls.
        • 13) Commitment to asset management, equity asset management, and active REIT equity management.
        • 14) Stability and growth of client assets to allow for economies of scale that will allow for continued investment in staff, management, vendor oversight and technology that is necessary to successful contract performance.
      • The firm shall meet with Corporate Investment Department (CID) staff twice a year, which will be coordinated with the Contracting Officer’s Representative (COR).