Corporate MovesSeptember 15, 2021

Pension Fund Investment Portfolios Thrive During Pandemic

Many of the world’s largest institutional investors report over 20% gains despite the economic impact of COVID-19.

Reported by Michael Katz

Despite the economic difficulties caused by COVID-19, the world’s largest institutional investors have thrived during the pandemic, as numerous pension funds have reported returns of more than 20% for the most recent fiscal year.

The strong gains helped the 300 largest pension funds in the world grow their assets under management (AUM) by 11.5% to reach a collective $21.7 trillion in 2020, according to research from the Thinking Ahead Institute.

The world’s largest pension fund, Japan’s $1.68 trillion Government Pension Investment Fund (GPIF), reported a record 25% return on its investments for the fiscal year ended March 31.

Australia’s sovereign wealth fund, known as the Future Fund, reported a record 22.2% return for the fiscal year ended June 30 to reach A$196.8 billion ($144.3 billion) in assets, while its antipodean neighbor, the New Zealand Super Fund, posted its strongest ever annual return of 29.63%, raising its asset value to NZ$59.8 billion ($42.5 billion), an increase of NZ$15 billion over 12 months.

In Europe, Swedish pension fund AP1, which benefited from one of the strongest domestic stock markets in the world, reported an 11% investment return for the first half of 2021 to raise its total AUM to just over $50 billion, while Denmark’s ATP earned a 17.9% return for the first half of calendar 2021, raising its total asset value to $146 billion.

And in the US, major public pension funds in California, New York, Pennsylvania, Massachusetts, Maryland, and Kentucky reported double-digit investment returns during the past fiscal year.

California giants the $308.6 billion California State Teachers’ Retirement System (CalSTRS) and the $469 billion California Public Employees’ Retirement System (CalPERS) reported returns of 27.2% and 21.3%, respectively. That return was the highest ever for the CalSTRS.

The $254.8 billion New York State Common Retirement Fund reported a record 33.55% investment return for the fiscal year ending March 31; the $95.7 billion Massachusetts Pension Reserves Investment Management Board (MassPRIM) reported a 29.5% return, the highest in the pension fund’s 35-year history; and the $22.7 billion Kentucky Public Pension Authority (KPPA) returned a best-ever 25% net of fees for the fiscal year ended June 30, raising its total asset value to $22.7 billion.

Meanwhile, the Florida Retirement System returned 29.46% to push its total asset value to $250.5 million, and the Public Employees’ Retirement System of Mississippi returned 32.71% to grow to $35.6 billion.

The $94.8 billion Ohio State Teachers Retirement System (STRS), which was recently accused in an audit report of squandering billions of dollars, reported returns of more than 29% for the fiscal year ended June 30. And despite being under an FBI investigation over alleged kickbacks and bribery, the $65.9 billion Pennsylvania Public School Employees’ Retirement System (PSERS) reported a 25% investment return for the fiscal year ended June 30, its highest return in two decades.