March 13, 2017

PA School Employees Pension Fund Reported 10.74% Earnings In 2016

The PA School Employees Retirement System Chief Investment Officer James H. Grossman, Jr. reported Friday PSERS returned 10.74 percent for the one-year, 5.75 percent for the three-year, and 7.43 percent for the five-year periods ended December 31, 2016.
Long-term PSERS returned 7.85 percent for the 25-year and 8.39 percent for the 30-year periods ended December 31, 2016. The long-term returns remain well above PSERS investment earnings assumption of 7.25 percent.
Grossman commented, “PSERS finished the calendar year with strong returns as investment markets continue to rally. PSERS earned a positive 10.74 percent for the 2016 calendar year and added $4.8 billion in net investment income to the Fund. All major asset classes PSERS invested in generated positive returns and Energy Master Limited Partnerships, U.S. Equities, Risk Parity, and Commodities were the best performing asset classes in 2016.”
“PSERS fiscal year is off to a strong start with two positive quarters of investment growth,” said Grossman. “In addition, the first two months of 2017 have continued a positive trend. We remain optimistic about the current fiscal year. If the markets continue to do well, PSERS appears on track to beat its earnings assumption of 7.25 percent for the current fiscal year which ends June 30th. PSERS asset allocation is performing as expected, generating good returns while prudently controlling investment risk.”
In 2009 PSERS’ Board made the decision to improve the Fund’s diversification by reducing the reliance on equity markets and increasing the allocation to risk diversifying asset classes to create a more risk balanced asset allocation.
Since the fiscal year beginning after the Great Recession, PSERS earned an annualized 9.22 percent (net of fees) and outperformed a passively-managed global 60 percent equity/40 percent fixed income portfolio which returned an annualized 7.71 percent during the same time period while taking less investment risk than the passively managed portfolio.
Additionally, during the meeting Grossman reported that Chief Investment Officer Magazine recently awarded PSERS with the 2016 Industry Innovation Award for Public Defined Benefit Plans, $15 billion to $100 billion.
This investment industry award recognizes innovation in institutional investing. PSERS was one of seven public plans nominated for this award.
Grossman thanked the Board for their support, “Without the support and vision of the Board, PSERS Executive Staff and our investment partners, PSERS Investment Staff would not have been able to implement our innovative investment strategies. Your support for enhancing PSERS investment operations has helped make PSERS Investment Office a leader among public pension funds.”
During the meeting PSERS Chief Financial Officer Brian S. Carl also reported that the Government Finance Officers Association of the United States and Canada (GFOA) recently awarded PSERS a Certificate of Achievement for Excellence in Financial Reporting for the Fund’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2016.
PSERS has earned this prestigious award for the past 34 consecutive years. The GFOA Certificate of Achievement, a national award established in 1945, is the highest form of recognition in the area of governmental accounting and financial reporting, and its attainment represents a significant accomplishment by PSERS and its management.
PSERS remains committed to increasing the transparency of its operations and continuing to provide accurate comprehensive plan data on a timely basis.
For more information, visit PSERS Investment Program webpage.
How PSERS Pension Fund Beat Market Indexes In 2016