Exclusive: Minnesota State Pension to Achieve Highest Returns Since 1983

Mansco Perry III

Mansco Perry, executive director and chief investment officer of the Minnesota State Board of Investment (MSBI), and his investment team seem to have done it again.

Early numbers for the state of Minnesota pension plan show returns for fiscal year 2021 (i.e., for the 12 months ending June 30) of 30.3%, the highest since 1983, when the fund returned 40.3%.

It’s the highest return since Perry took the CIO role on in 2013.

How? Domestic equity produced a 45.3% return, and private markets returned 37.8%.

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A year ago, the investment team made some changes to the funds’ strategic allocation. The MSBI allocation is now 50% in public equity (33.5% domestic, 16.5% international, and some global equity being funded on a pro rata basis); 25% in fixed income; and 25% targeted to private market investments, with the uninvested commitment dollars housed in a separate S&P 500 portfolio.

The fund’s fixed-income portfolio is a combination of a 10% allocation to Treasurys; 5% to core and core plus bonds; 5% to a return-seeking bucket which includes high-yield, emerging markets, and other credit-focused areas; and 5% to a liquidity-focused cash and short-term Treasury ladder portfolio.

MSBI has three-, five-, and 10-year investment returns of 13.4%, 13.1%, and 10.4%, respectively. Its 20-year return is 8.1%.

Perry points out that “the focus of the portfolio is to capture economic growth, provide some protection in the event of equity drawdowns, and to have a safety cushion of liquidity to ensure that we can provide comfort to our retirees that there will be no interruption in benefit payments. While we have been fortunate that our investment performance has been above average, our mission isn’t to make the most money we can, but to satisfy our liabilities and keep the promises made to our participants.”