Rhode Island Pension Fund Returns 11.6%

Rhode Island’s pension fund earned more than $872 million and returned 11.6% for the fiscal year ending Sept. 30, bringing its total asset value to $8.2 billion from $7.7 billion at the same time last year.

The returns surpassed the plan’s 11.1% benchmark, and a traditional 60/40 stock-bond portfolio, which would have earned 10.9%, and is up from last year’s net return of 7.4%. The fund also reported three-, five-, and 10-year annualized returns of 5.9%, 7.6%, and 4.5%, respectively, compared to its benchmark, which returned 5.7%, 7.1%, and 4.4% annualized over the past three, five, and 10 years, respectively.

For September, the total portfolio value increased by approximately $23.6 million. According to Rhode Island’s Office of the General Treasurer, the month’s $74.4 million of positive investment performance was offset by $50.9 million in transfers to meet pension payroll in excess of pension contributions. It also reported that on a percentage basis, the portfolio increased 0.91% net of fees, underperforming the plan’s benchmark, which earned 1.01%, and the 60% global equity/40% fixed-income benchmark, which gained 0.97%.

For the calendar year-to-date, the total portfolio rose $497.9 million, with net gains of $790.7 million, which were offset by $292.8 million in pension payments. The portfolio’s 10.42% net return outperformed the strategic benchmark of 10.39%, but fell short of a 60/40 portfolio, which would have returned 11.43%.

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The results were the first full-year earnings since Rhode Island Treasurer Seth Magaziner launched his “Back to Basics” investment strategy. As part of the strategy, Magaziner has moved more than $500 million out of hedge funds and into more traditional investments.

“I am committed to bringing growth and stability to our State’s pension fund,” said Magaziner. “Our Back to Basics approach is improving investment returns through common sense investments and providing financial security for those who have dedicated their careers to public service.”

Tags: Fiscal Year, Pension, Returns, Rhode Island Treasurer

The $15.34 billion Ohio Police & Fire Pension Fund’s (OP&F) board of trustees has lowered the assumed rate of return on its investments to 8% from 8.25%.

The board also approved a recommendation by Wilshire Associates, the fund’s general investment consultant, to restructure the portfolio’s non-US equity asset class. Based on Wilshire’s structure analysis, the fund said Fidelity Asset Management’s $259 million non-US equity small-cap mandate will be terminated.

“The previous non-US equity structure has been in place since 2011, and the entire asset class was reviewed for efficiencies regarding active risk and return objectives,” David Graham, communications manager for OP&F, told CIO. “The new structure boosts expected return and reduces expected risk, while allowing OP&F to reduce its overweight to international small-caps, and move closer to its overall target for the asset class.”

OP&F said it will work with Wilshire Associates to conduct a closed search for an active ACWI ex-US manager to take over a portfolio currently run by Russell as an interim transition assignment. Non-US equity is currently 21.2% of the total portfolio; however, this is well above the fund’s long-term target allocation for non-US equity of 16%.

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In its investment note for October, OP&F said its real estate consultant, Townsend Group, reviewed performance for periods ended June 30, and reported a 2.1% net return for the quarter, and a 12-month net return of 8.1%.

The OP&F board also approved a recommendation to commit up to $50 million to Tennenbaum Direct Lending Fund VIII. OP&F currently invests in Tennenbaum Enhanced Yield Fund. Additionally, the board agreed to expand Wilshire Associates’ current investment consulting services to include private credit consulting. Prior to June, private credit managers were part of OP&F’s high-yield allocation. However, private credit is now a distinct asset class within the portfolio with a 5% asset allocation.

OP&F is a cost-sharing, multiple-employer public employee retirement system, serving approximately 27,000 active members and more than 30,000 retirees and their beneficiaries.

Tags: Ohio Police & Fire Pension Fund, Pension, Wilshire Associates

Ohio Police & Fire Pension Cuts Assumed Rate of Return to 8%