The PERS portfolio enjoyed some good news at the meeting of the Investment Committee last week.
With only a month to go in the 2023 fiscal year, the PERS portfolio earned a return of 4.4%. The protfolio's assumed rate of return is 7.5%. However, PERS might have caught a bit of a break in June. The index rose 4% in June so PERS investments probably realized similar results. Stocks were good to PERS but real estate and private equity blunted their performance.
The returns for the various investments are:
Domestic equity: 11.8%
International equity: 9.7%
Global equity: 10.4%
Fixed Income: 1.0%
Real estate: -8.7%
Private equity: -4.1%
Although PERS enjoyed a positive rate of return, the assets fell $700 million to $31.1 billion ($31.8 billion on June 30, 2022). Such a decrease during a period of positive returns means investment income was not enough to pay benefits, thus forcing PERS to use its assets.
Slightly more than half of the PERS portfolio is invested in stocks (56%). The asset allocation is posted below. (p.11)
Annual Rate of Return since 2000
2000: 8.4%
2001: -7.1%
2002: -6.6%
2003: 3.5%
2004: 14.6%
2005: 9.8%
2006: 10.7%
2007: 18.9%
2008: -8.2%
2009: -19.4%
2010: 14.1%
2011: 25%
2012: 0.6%
2013: 13.4%
2014: 18.3%
2015: 3.5%
2016: 1.16%
2017: 15%
2018: 9.2%
2019: 6.8%
2020: 3%
2021: 32.7%
2022: -8.6
Five-year average: 8.3% (7.66% if above results are included)
Ten-year average: 9.45%
Assumed Rate of Return: 7.55%
14 comments:
Bidenomics is kicking in.
How much are the workers paying the investment advisors every year to underperform? Commercial real estate is a dog investment and it won’t get better for years. And the banks holding the notes on those properties are about to get killed for it. Double whammy. Free advice: if you have your money with a regional bank you might want to see what their exposure is on the commercial RE lending side.
My 10 year old could write a chat gpt prompt that’ll make more money through better allocation than the current sages making millions.
2021 was a good year under trump
Meanwhile my index fund in my Roth IRA has me at 7.8%
Private Equity (-4%)
Of course it tanks in year immediately after PERS increased its allocation to PE funds.
S&P 500 index fund was up 14.9% from 7/1/22-6/30/23 with no management fees.
PERS private equity allocation was negative (4.06%) FYTD and its private equity benchmark was UP 15.62% FYTD. Talk about paying for underperformance! That’s a 19.68% difference in performance from the same asset class! PERS is pathetic.
I am a current retiree and have asked the State Auditor to look into the relationship between the members of the PERS board and those who are payed to manage the funds. How many dinners and other perks have been afforded PERS board members to continue to pay fund managers for such dismal performance. I have an ETF that is up 58.6% the last 5 years and I don’t do anything, no management fees, nothing. The amount of money paid for the funds management is not justified with a 4% return. Hell, you can buy a certificate of deposit and get 5%.
Also, begin to take steps to insure the long term viability of the system so that those of us who are dependent on PERS don’t end up homeless in our 70’s and 80’s.
The real long term solution is to do away with PERS for those who have 20+ years until retirement and let them invest their money. This would require the state to provide a way to fund the system until all of us have died off.
Don’t claim to be smart enough to know the answer but obviously the path PERS is on is not sustainable.
Will the last one in the room please turn out the lights-
Something sticks at PERS, State auditor where are you????
Are they still paying the investment advisors $50,000,000 per year in fees to invest the fund money.
I'd do it for less.
PERS will go away. It can be easy, or the hard way. Political cowards abound in Mississippi.
Yeah if whoever manages PERs, managed my portfolio, they would have been fired years ago. If the state pays them $50mil, that's part of the problem. He'll the state could stick it in a hedged equity S&P 500 index with a stop loss and let it ride on cruise control. Except online brokerages like Fidelity don't take the PERs board to dinner or on trips.
Hark! The haircut approacheth.
Post a Comment