Maryland State Pension Fund Returns 3.14% in Fiscal 2023

The Maryland State Retirement and Pension System reported a 3.14% investment return, net of fees, for the fiscal year ending June 30 to raise its asset value to $65.2 billion from $64.6 billion one year earlier. The performance was less than half the pension fund’s 6.8% assumed rate of return but beat its policy benchmark, which earned 2.20% during the period.

Public equity was the top performing asset class for the pension fund during the fiscal year, returning 13.77%, followed by its credit investments, which earned 5.99%. Cash investments returned 5.26%, while private equity returned 0.26%. Meanwhile, rate-sensitive investments and real assets were the worst performers for the portfolio, losing 3.70% and 3.43%, respectively, during the year, followed by multi asset and absolute return, which lost 1.55% and 1.37%, respectively.

The fund noted the fiscal year performance is reflective of multiple difficult market factors, including rising interest rates, persistent inflation, weak emerging market performance due to a slower-than-expected post pandemic recovery in China and the time delay for private market investments to reflect public market valuation changes. However, it also highlighted a resilient real economy and higher U.S. stock prices despite rising rates and pressures on the banking system.

Over the shorter term, the pension fund reported three- and five-year annualized returns of 8.23% and 6.93%, respectively, ahead of its benchmark’s returns of 7.07% and 6.28%, respectively, over the same time periods. Over the longer term, the portfolio reported 10- and 20-year annualized returns of 7.04% and 6.83%, respectively, while its benchmark had a 6.50% 10-year annualized return. The pension fund did not provide 20-year annualized return figures for its benchmark.

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“The board has adopted a diversified asset allocation that has achieved the long-term return targets with as little volatility as possible,” Maryland SRPS CIO Andrew Palmer said in a release. “The allocation includes a mix of assets that behave differently as markets ebb and flow to reduce volatility in any one period.”

Private and public equity investments have been the engines driving the pension fund’s returns over the past five and 10 years. MSRPS’ private equity investments have returned 17.16% and 16.42% over the past five and 10 years, respectively, whiles public equity investments have returned 7.04% and 8.41%, respectively, over the same periods.

As of the end of June, the pension fund’s asset allocation was 30.2% public equity, 21.9% private equity, 17.1% rate sensitive, 15.4% real assets, 8.7% credit, 5.9% absolute return, 0.4% multi asset and 0.4% cash.

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Tags: Andrew Palmer, fiscal 2023, investment returns, Maryland State Retirement & Pension System (MSRPS), Public Equity

The board of the Ontario Teachers’ Pension Plan reported a 1.9% return for the first six months of the year and a 4.8% return for the 12 months ending June 30, as the fund’s net assets rose to C$249.77 billion ($185.15 billion) from C$242.50 billion in June 2022.

“Our investment portfolio is purposely designed to help us achieve stable returns over the long term, and our half-year results demonstrate that our portfolio construction is working as planned,” Jo Taylor, president and CEO of OTPP, said in a release. “Our balanced portfolio positions us well to navigate markets that we anticipate will continue to be volatile in the coming years.”

The pension fund also reported five- and 10-year annualized net returns of 7.0% and 8.6%, respectively, and a 9.4% annualized return since its inception in 1990.

The pension fund’s public equity investments rose to C$23.3 billion as of the end of June, from C$21.9 billion at the start of the year, while the value of its private equity investments increased to C$60.7 billion from C$58.3 billion during the same period. OTPP’s fixed-income holdings increased during the first half of the year to C$118 billion from C$76.2 billion, while its infrastructure and real estate holdings increased to C$42.4 billion and C$29.3 billion, respectively, from C$39.8 billion and C$28.1 billion, respectively.

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“We saw positive returns across multiple asset classes, including public and private equities, infrastructure, and credit over the course of the first six months of 2023,” OTPP CIO Ziad Hindo said in a release. “Looking ahead, we will remain disciplined as we pursue attractive investment opportunities while building value within our high-quality portfolio of companies.”

According to OTPP, as of January 1, the plan was fully funded with a $17.5 billion funding surplus.