Between April 3 and April 8, the 25 largest public pension funds in the U.S. saw their asset valuations decline by $169 billion, a result of the stock market losses that occurred that week.
Despite significant market volatility, public pension funds are communicating with their participants about the long-term focus of their investment portfolios.
“The value of the state pension fund has fluctuated, and we anticipate market volatility to continue if the tariff policies continue,” an April 11 statement from the Rhode Island General Treasurer’s office read. “However, we remain confident in the state’s current asset allocation, previously adopted by the State Investment Commission and specifically intended to protect against market volatility through a diversification of assets.”
The $54 billion Illinois Municipal Employees Retirement Fund, which manages retirement assets for local government employees in the state, pointed to the portfolio’s ability to withstand market fluctuations due to diversification. “IMRF doesn’t rely on a single investment strategy. Instead, it ensures a stable and well-performing portfolio by spreading risk across asset classes and management styles,” said Brian Collins, executive director of the IMRF, in an April 10 statement.
The pension fund allocates 36.5% of its assets to equities, 22% to fixed income, 19.4% to global equities, 12.1% to alternative investments, 9.6% to private real assets and 0.4% to cash equivalents.
“This is a challenging time, especially for those worried about their retirement savings. As an IMRF member or retiree, please know that our long-term investment strategy protects the pension fund and your retirement. IMRF has never missed a pension payment and never will,” said Collins.
Marcie Frost, CEO of the California Public Employees’ Retirement System, speaking at an April 15 board meeting, also pointed to diversification as a way of ensuring a stable portfolio, amidst market volatility.
“Our mandate, which is enshrined in the California Constitution, is a diverse portfolio, ensuring that we can weather a variety of financial storms. The exposure to higher risk assets is complemented, for example, by investments and other assets that are more defensive. A diversified approach is essential to preserving capital and maintaining stability through market cycles,” Frost said.
Frost noted that the pension fund had $532 billion in assets under management the day before the tariffs went into effect. Within a week, the value of the fund’s assets declined by $26 billion. Frost warned that current trade policy could have a serious impact on the fund’s fiscal year investment returns, which end June 30.
“We’ve seen global financial markets respond swiftly and overall, negatively to policy decisions made by the U.S. government. It’s the kind of market disruption that has impacts for investors, small and large, including CalPERS,” Frost said.
Frost voiced similar concerns as those from NYC Comptroller Brad Lander, who oversees the city’s $285 billion pension system. In a statement, Lander warned of uncertainty due to tariff policies.
“New York City’s pension systems are invested broadly, for the long term, and on solid ground to meet all our obligations to our city’s retired teachers, cops, firefighters, and all municipal workers. Still, despite our prudence, this level of uncertainty is bad for markets, bad for the economy, bad for investors, and bad for New York City,” Lander said.
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Tags: Brad Lander, Brian Collins, CalPERS, IMRF, Marcie Frost