Pension board takes stock at Travaglini exit

At a regularly scheduled meeting yesterday, the fund’s executive director, Michael Travaglini, officially announced that he will leave on June 11 to work for a hedge fund. The board voted to make one of Travaglini’s deputies, Karen Gershman, interim chief during the search. Gershman, who has served in the role before, confirmed that she is interested in the top job.

The board plans to present its recommendation for a permanent executive director in August.

Treasurer Timothy P. Cahill, who is chairman of the pension board, said Travaglini “has done a fantastic job of helping guide this board’’ during good and bad times. While the fund fared poorly during the market’s collapse in 2008-2009, it was in the top 10 percent of all pension funds over the past seven years, said Cahill, who is running for governor. Travaglini has been in charge for six years.

Over 10 years, the fund is in the 32d percentile of its peers, and more recently, it has ranked lower than that. The fund generally seeks to be in the top quartile of similar pension portfolios.

But last month was a bad one — the worst May for the stock market since 1940. May wiped out $1.5 billion in investment gains made so far in 2010, Stanley Mavromates, chief investment officer, said yesterday.

While the calendar-year gains have been erased, the pension fund still has a double-digit gain for the fiscal year, which ends June 30. Through April 30, the fund had returned 19.7 percent for fiscal 2010; May’s losses, when fully tallied, will probably lower the gains so far for the fiscal year to 15.7 percent, a fund official estimated.

Comparisons with other pension funds’ performance for May are not yet available. But it was a bad month for most investors, with an 8 percent drop in the Standard & Poor’s 500 Index, driven both by a one-day, 1,000-point drop in the Dow Jones industrial average and concerns about government debt in Europe. Even most hedge fund strategies lost money in the month, including some managers who famously made money during the financial crisis, according to a Bloomberg report.

Travaglini has said he was leaving the pension fund partly because the Legislature may cap bonuses in a given year if the fund loses money. That issue could present a challenge as the board looks to hire a new pension chief, because investment jobs in the private sector pay much more than the state job. Travaglini’s base salary is $322,000, and he earned a bonus of $64,000 in 2008.

Pension board member Robert Brousseau said the group would post the pension job on its website, rather than paying a recruiter $100,000 to hunt for people, as it did in 2003. After that search, the board hired Travaglini, a well-known face in state government, who had worked for former state treasurer Shannon O’Brien and whose brother Robert is a former state Senate president.

Cahill, in an interview, said he is committed to a broad search for Travaglini’s successor. He learned the hard way: A candidate he had presented for the job the last time around was rebuffed by the board. “I’ve learned a lesson from that. It’s important who you pick and how you get there,’’ he said.

But, Cahill said, the job’s pay has historically been an issue. “It’s a challenge to get people to move to Massachusetts because of the high cost of living,’’ he said. “I think it’s a very good, solid, fair salary. But if you’re coming from other public pension funds or the private sector, it’s a challenge to break into this market.’’

Beth Healy can be reached at bhealy@globe.com.