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Asset Allocation

US Equities Lead 9.8% Penn SERS Return for 2024

The pension fund's asset value rose by $3.5 billion to $38.7 billion despite ending the year with a Q4 loss.
By Michael Katz




U.S. equities buoyed the Pennsylvania State Employees’ Retirement System’s 9.82% return for 2024, raising its asset value to $37.8 billion, but falling six basis points shy of its benchmark, the fund reported. The $3.5 billion increase was maintained despite the pension ending the year with a slight fourth quarter loss.

Over the past 10 and 25 years, the pension fund has registered returns of 7% and 6.18%, respectively, trailing its benchmark’s returns of 7.68% and 6.7%, respectively, over the same time periods. Since the fund’s inception in 1981, the portfolio has had an annualized return of 9.27%.

For the year, PennSERS’ U.S. equities investments returned 23.4%, slightly less than the Russell 3000 Index and the S&P 1500 Index, which gained 23.8% and 24%, respectively. Legacy private credit funds were a distant second with a 10.50% gain but missed their benchmark by nine basis points. Emerging markets equities returned 8.64%, easily beating the benchmark return of 7.43%, while private equity earned 6.28%. Private equity’s benchmark returns were not available.

The fund’s cash investments returned 5.44% for the year, ahead of the three-month Treasury bill’s 5.25% return. International developed markets equities were up 4.97%, topping its benchmark by 82 basis points, while fixed-income investments were up 2.48%, nearly doubling the Bloomberg U.S. Aggregate Bond Index’s 1.25% gain. The pension’s Treasury inflation protected securities investments earned 1.81% for the fund, which barely missed its benchmark by three basis points.

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Real estate was PennSERS’ worst-performing asset class for the year, losing 12.25% and falling well short of its benchmark’s 8.44% loss.

Over the long term, private equity is the pension fund’s top-performing asset class, with 10- and 25- year annualized returns of 11.83% and 10.55%, respectively, followed by U.S. equities, which earned 11.79% and 7.57%, respectively, over the same periods. They are also PennSERS’ top-performing asset classes since its inception with an 11.33% gain for private equity and an 11.06% return for U.S. equities.

As of the end of 2024, the PennSERS asset allocation was 37.35% U.S. equity, 18.11% fixed income, 17.38% private equity, 11.54% international developed markets equities, 5.74% real estate, 5.29% cash, 2.45% Treasury inflation protected securities, 1.1% emerging markets equities and 0.89% legacy private credit funds.

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Home > News > Market Moves > The Sectors Strategists Say Will Do Well, Poorly in a Trade War
Market Moves

The Sectors Strategists Say Will Do Well, Poorly in a Trade War

Cars, tech and retail are expected to be hit hard, but health care is likely a safe haven.
By Matt Toledo



The S&P 500 is down nearly 10% in two trading days following the Wednesday announcement of tariffs as high as 49% on U.S. trading partners.  

Equity markets fell another 4% to 5% Friday after China announced 34% retaliatory tariffs on U.S. exports. Friday’s drop came on the heels of a rout on Thursday that produced the worst one-day losses since 2020 as uncertainty set in. A flight-to-quality trade pushed investors to U.S. Treasurys, driving the yield on the 10-year bond below 4% for the first time since early October.  

In a note to clients, Wedbush Securities analyst Daniel Ives warned that the announced tariffs could set the U.S. tech industry back a decade while reducing tech earnings by at least 15% and raising costs by nearly 50% for consumers.  

“The economic pain that will be brought by these tariffs are hard to describe and can essentially take the U.S. tech industry back a decade in the process while China steamrolls ahead,” Ives wrote. “50% China tariffs, 32% Taiwan tariffs, would essentially cause a shut-off valve from the U.S. tech landscape and in the process cause [the price of] every electronic to go up 40%-50% for consumers.”  

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The automotive industry is also expected to be hit hard by tariffs. With a separate 25% tariff on automotive imports already in effect, Cox Automotive, which runs AutoTrader and Kelley Blue Book, stated it anticipates higher prices, lower new vehicle sales and less availability of cheaper cars, which in turn will increase the prices of used cars.  

Deutsche Bank expects used car prices to increase between 7% and 19%, and while obviously not good for consumers, bank analysts foresee a silver lining for downstream companies like rental and used car companies, which could benefit from higher prices on resale vehicles. 

The tariffs also are producing headwinds for the retail sector, according to Deutsche Bank. 

“Our key take from Wednesday’s announcement is that tariffs will likely pose a significant profitability headwind to virtually the entire U.S. retail sector. While there was uncertainty around the magnitude of tariffs and the list of countries heading into the announcement, we think the outcome—and broad-based nature of the tariffs— was far worse than expected,” wrote Deutsche Bank analyst Krisztina Katai. 

The administration of President Donald Trump is also considering more sector-specific tariffs, including on semiconductors, pharmaceuticals and other critical minerals, according to J.P. Morgan Asset Management. 

The Winners 

Which sectors can be defensive against a trade war? “Health care services, which includes hospitals and residential care facilities, are supporting employment growth [and are] likely less sensitive to tariffs,” wrote Jeffery Roach, an economist at LPL Financial, in a report.  

J.P. Morgan Asset Management wrote that domestically oriented companies and companies that are service-oriented and that have higher pricing power are likely to fare better.  

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