The City of Phoenix Employees’ Retirement System reported a 5.4% investment return for the fiscal year that ended June 30, beating both its policy and custom benchmarks’ returns of 4.5% and 5.3%, respectively, to raise its asset value to $3.37 billion.
The top-performing asset class for the pension fund’s investment portfolio during the fiscal year was natural resources, which returned 15.3%, followed by developed market equities outside the U.S. and bank loans, which returned 14.5% and 11.9%, respectively. Emerging markets equities and U.S. equities returned 11.6% and 11.2%, respectively, while emerging market bonds returned 10.4%.
High-yield bonds gained 5.9% during the fiscal year, followed by global tactical asset allocation investments, which earned 4.7% for the pension fund. Cash equivalents and hedge funds returned 3.7% and 1.2%, respectively, while real estate investments lost 2.6% during the fiscal year.
As of the end of June, the asset allocation for the pension fund’s investment portfolio was 47.1% equities, which includes 21.5% in U.S. equities, 12.6% in developed market equities, 7.6% in private equity and 5.4% in emerging market equities. It has 18.8% allocated to real assets, which includes 14.5% in real estate, 2.5% in infrastructure and 1.8% in natural resources.
Another 14.9% is allocated to rate-sensitive investments, which includes 10.5% in investment grade bonds and 4.4% in Treasury inflation-protection investments. Another 9.5% is in credit, which includes 4.5% in high-yield bonds, 2.8% in bank loans and 2.3% in emerging market bonds. The pension fund also has 4.2% in hedge funds, 3.0% in global tactical asset allocation investments and 2.5% in cash equivalents.
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Tags: Asset Allocation, City of Phoenix Employees' Retirement System, COPERS, fiscal year 2023, investment returns