A nationwide non-public fairness commerce group has rated the West Virginia Funding Administration Board because the nation’s second-best public pension fund, primarily based on returns on non-public fairness investments.
The 2021 Public Pension Research, launched Wednesday by the American Funding Council, discovered the board’s 10-year annualized 16.06% return on fairness investments is second solely to the Illinois State Board of Funding, which had a 16.10% return on investments.
“For the second yr in a row, the Illinois State Board of Funding had one of the best performing non-public fairness portfolio, incomes a 16.10% annualized return for public servants within the Land of Lincoln, web of charges. The West Virginia Funding Administration Board, Lecturers Retirement Affiliation of Minnesota, and Massachusetts’ Pension Reserves Funding Belief earned spots two by means of 4, respectively, all delivering returns above 15 p.c, web of charges,” the examine states.
The nationwide common for public pension funds’ return on fairness investments is 12.3%, the examine discovered.
Craig Slaughter, Funding Administration Board govt director, stated Wednesday the nationwide recognition is gratifying, and credited laws handed in 2007 that broadly expanded funding choices for the board, together with permitting investments in shares.
“The unique thesis for the choice was that personal fairness may generate further return, however provided that finished effectively,” Slaughter stated. “The examine means that now we have finished our job effectively.”
Slaughter added, “Whereas the success of the IMB is a staff effort, Jim Herrington, the IMB’s non-public fairness funding officer, deserves quite a lot of credit score for the superb efficiency of the non-public fairness portfolio.”
In Could, Slaughter reported to legislators the IMB was experiencing a 21% annual return on investments, growing the worth of the state funding portfolio from $20.13 billion on July 1, 2020, to $23.16 billion as of Feb. 28, 2021.
Nonetheless, he known as on legislators to mood their expectations for the longer term, telling the Joint Committee on Authorities and Finance, “Issues are inclined to clean out, and a extremely dangerous yr may hit you actually arduous.”
From July 1, 2020, to Feb. 28, the state’s two largest pension funds every grew in worth by greater than $1 billion, with the Lecturers Retirement Fund going from $7.8 billion to $8.9 billion, and the Public Staff Retirement System rising from $6.89 billion to $7.99 billion.
Presently, the pension funds have to have funding development of seven.5% a yr, or the Legislature has to acceptable state funds to maintain these plans on stable monetary footing.
Slaughter has repeatedly argued that 7.5% annualized development might not be sensible going ahead, noting the nationwide economic system had loved 10 straight years of development pre-pandemic, and that an financial downturn is inevitable in some unspecified time in the future.