FOR IMMEDIATE RELEASETreasurer Cowell Reports Second Quarter and Fiscal Year Pension Fund Returns
Raleigh, N.C. - Today at the Investment Advisory Committee meeting, the Department of State Treasurer reported state pension fund returns for the second quarter of 2016 ending June 30, 2016. The fund, comprised of the retirement plans the Department manages, reported a gain of 1.77 percent. Over the last 12 months, the fund gained 0.8 percent. These figures and all of the following performance figures are reported net of all fees and expenses. Pension fund assets were valued at $87.57 billion.
State Treasurer Janet Cowell said, “The low-interest-rate market environment will likely continue to keep investment returns relatively low over the next few years. However, the General Assembly’s conservative funding policy and our office’s long-term diversified investment strategy should keep us one of the most solid pensions in the nation.” North Carolina’s actuaries recently estimated the Teachers and State Employees’ Retirement System as 95.6% funded, one of the highest funding ratios in the country. The fund returned an average annual gain of 5.98 percent and 8.53 percent over the last 5 years and 7 years, respectively.
Treasurer Cowell added, “Over the past five years, the Department’s investment policy developed in consultation with the Investment Advisory Committee has helped the state pension fund outperform most large public pension funds, with lower risk and cost.”
· Compared to all public funds with greater than $1 billion of assets, North Carolina’s return on investment was at the 45th highest percentile over the last five years, as tracked in BNY Mellon data.*
· CEM Benchmarking, in its most recent independent analysis of North Carolina pension fund investments, found that North Carolina had total investment cost of 49.9 basis points (0.499% of total assets per year) that was below the peer median of 63.4 basis points (0.634% of total assets per year).
Over the past five fiscal years, traditional stock and bond investment strategies were materially outpaced by the pension fund’s private market investments, with each rising at average annual rates of 6.21 percent, 5.17 percent, and 7.98 percent, respectively.
For the last fiscal year, public equity (stocks), which account for 42.5 percent of the fund, fell 3.89 percent. Returns outside of public equity provided diversification in line with the Department’s investment policy. For the fiscal year, the strongest performers were investment-grade fixed income (bonds) rising 7.25 percent; non-core real estate rising 12.39 percent; private equity rising 4.32 percent; and core real estate rising 8.53 percent. For the fiscal year, the weaker performers were opportunistic fixed income declining 4.40 percent; inflation sensitive declining 5.75 percent; and multi-strategy declining 1.46 percent. See the report for a full reporting of all asset classes
* In the BNY Mellon data, the highest return is at the 1st percentile. The 45th percentile means that North Carolina’s investment return exceeded the investment returns of more than half of public pension funds with assets greater than one billion dollars.
The North Carolina Retirement Systems, the formal name for the pension fund, is the tenth largest public pension fund in the country. It provides retirement benefits and savings for more than 900,000 North Carolinians, including teachers, state employees, firefighters, police officers and other public workers. For more information, visit www.nctreasurer.com.