The head of the South Dakota Investment Council says state assets are “very cautiously positioned” in the market right now.
That update came during the latest executive board meeting of the state Legislature.
Matt Clark has been with the state investment council for 42 years. It manages the South Dakota Retirement System that funds benefits for over 103,000 members.
Clark said state assets in stocks will range anywhere from 50 to 85 percent. The investment council tries to keep the ratio around 70 percent if stocks seem fairly valued, which Clark says is typical for most pension funds
“So, just like Buffet—since that was in the news this past week — we have roughly 35 percent of our money in cash," Clark said Wednesday. "It’s in treasury bills and money market funds earning four percent or thereabouts. Because the markets are so high”
So, for the last few years, Clark said fifty percent of the state’s assets are sitting in stocks.
That means state investments won’t grow as quickly. On the flip side, he said it won’t lose as much if markets go down.
More cash during a downturn allows the investment council to buy stocks.
Clark said monetary policy in the last decade have juiced the markets—from federal stimulus dollars to national debt to holding interest rates at zero for some time.
Clark said the level of state assets has increased sharply in recent years. During the last decade, assets managed by the investment council have nearly doubled, from $11 billion at the end of FY15 to over $20 billion now.
Clark worries there’s a bubble in the market and says things are overvalued.
“I’d be very surprised if we increase our asset level much from here for a while until we go through a cleansing process—probably have to lose some money first," Clark said. "Hopefully we won’t lose too bad because we’re so conservatively positioned, now.”
In February, Clark was instrumental in killing a bill that would allow the investment council to invest up to ten percent in the cryptocurrency Bitcoin, calling it a speculative asset
