COLUMBUS — Count Ohio’s five public employee pension funds among those watching the volatile mortgage investment industry.

The funds that provide retirement pay and health care for tens of thousands of teachers, police officers, firefighters and state workers have more than a half billion dollars invested in subprime mortgages, or home and property loans to people seen as credit risks.

That’s less than 1 percent of the funds’ combined $184 billion in investments. Much more — about 10 percent — has been put into more secure mortgages, many of them guaranteed by the federal government.

Wall Street is nervous about whether subprime mortgage-related losses are causing banks and other lenders to tighten up credit and whether the market for mortgage-backed securities has dried up.

Those concerns have taken stocks on a turbulent ride: Since the Dow Jones industrial average hit a record above 14,000 in July, it has swung up and down violently as investors try to gauge how tough the lending climate is getting.

Such investments aren’t unusual.

“I’m not surprised that any pension fund would own some,” said Aristotle Hutras, director of the Ohio Retirement Study Council, a legislative panel that monitors state pension funds.

Hutras said he is not alarmed by the funds’ investments in mortgages, although it’s sure to be discussed when the council meets again Sept. 12.

“We are concerned about the concern the market has over subprime,” said Bob Cowman, director of investments for the School Employees Retirement System. “It is having some repercussions.”

The school employees fund has a little more than $30 million invested in subprime mortgages.

The Ohio Public Employees Retirement System, the state’s largest pension fund with $82 billion in assets, has about $530 million worth of investments in subprime mortgages, or 0.64 percent of its investment holdings. The Highway Patrol Retirement System has $2.1 million in subprime mortgages and the State Teachers Retirement System has none. The Ohio Police and Fire Pension Fund has about $17.3 million invested in subprime mortgages.   

---

Print this story
Report an inappropriate comment

---

In order to comment, you must agree to our user agreement and discussion guidelines.

Need help? Email Us.

---