Nevada Pension Fund Earns 8.6% | Chief Investment Officer

Nevada Public Employees’ Retirement System’s investments returned 8.6% for the fiscal year ended June 30, raising its total market value by $2.57 billion to $41.27 billion, according to investment performance figures published on the system’s website. This compares to last year, when the system returned 10.5%.

The fund’s investments had three-, five-, and 10-year annualized returns of 7.5%, 8.8%, and 7.2%, respectively, and is up 9.4% since its inception in 1983. The fund has a target long-term return of 7.5%. It is the ninth-consecutive year that the state retirement system increased its net position.

The fund’s top-performing asset class was US stocks, which returned 14.3% for the fiscal year, followed by private markets, which earned 13.4% for the fund. International stocks returned 7.2% for the year, while US bonds lost 0.7% in fiscal 2018. Private equity was the top-performing sub-asset classes, returning 17.5%.

The asset allocation of the fund, as of the end of June, was 43.6% in US stocks (target 42%), 29.1% in US bonds (target 30.0%), 17.8% in international stocks (target 18.0%), 9.2% in private markets (target 10.0%), and 0.3% in cash (target 0%).

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

The system’s top US equity positions, as of the end of the fiscal year, were 3.93% in Apple Inc., 3.27% in Microsoft, 2.95% in Amazon, and 2.01% in Facebook. Meanwhile, its top international equity positions were in Nestle (1.7%), HSBC (1.31%), Novartis (1.2%), Royal Dutch Shell (1.11%), Roche (1.11%), and BP (1.05%).

The fund’s top asset managers in terms of assets invested are AllianceBernstein, with $8.99 billion, BlackRock, which is just $15 million behind; Mellon Capital with $7.35 billion, and UBS Global and Payden & Rygel, which each account for a little more than $6 billion.

Tags: Fiscal Year, Nevada Public Employees' Retirement System (PERS), Pension, Returns

Optimism remains bright for the hedge fund industry as two thirds of institutional investors were happy with their hedge fund returns over the past year, data firm Preqin reports.

Out of 530 investors surveyed in June, 66% were pleased with their performances, saying that their hedge funds had met expectations in the past 12 months. A small block of investors (16%) said their funds exceeded expectations.

Those surveyed also had a positive outlook for the near future, with 32% expecting their funds to do even better over the following year, and 51% that said their hedges will perform just as well as they have been doing.

Amy Bensted, head of Preqin’s hedge funds division, said that despite the industry’s mediocre returns in 2018, investors are seeing that “over the longer term, hedge funds have been able to generate positive returns.” She noted investors are worried about a peak approaching in the equity markets as well as difficulty generating consistent momentum due to the “instability of the political and macroeconomic climate.”

For more stories like this, sign up for the CIO Alert newsletter. 

More than two-thirds of institutional investors are planning to make their next hedge fund investments in the second half of this year, with 16% considering hedge fund allocations next year.

Of the surveyed, 28% are looking to increase exposure to systematic commodity trading advisors, or CTAs, in the next 12 months. About 26% will add more macro strategies to their portfolios.

As for the space’s 2019 growth areas, 63% of investors see the most opportunity in North America, 28% are looking in Asia, and 25% are eyeing Europe as the hedge fund industry’s next breakout spot.

“Investors perceive several benefits of hedge funds, citing diversification, low correlation to other asset classes and high-risk adjusted returns as key reasons to invest in the asset class,” said Bensted. “It is perhaps due to the current volatility in the market that that four out of five investors expect hedge fund performance to maintain or improve in the coming year.”

Tags: Hedge Funds, Preqin