Magaziner: Pension Investments Earned More than $500M in 2016

7.4% Net Investment Return is Highest Since 2013; Plan Beats Benchmarks

PROVIDENCE, R.I. – The state’s pension fund earned more than $530 million in investment
gains in 2016, the most in the past three years, General Treasurer Seth Magaziner
told members of the State Investment Commission at their monthly meeting this morning.
The state’s 7.4% net return beat its internal benchmark of 6.3% and a traditional
60% stock, 40% bond portfolio which would have returned 5.9% last year.
«In a year of significant volatility in the financial markets, the pension system
outperformed our benchmarks and earned more than $500 million for the pension system,»
said Treasurer Magaziner. «While this is encouraging and will help keep us on track
to reach a healthy funding level on time, I look forward to stronger performance
once our new Back to Basics strategy is fully implemented.»
In 2016 the State Investment Commission approved Treasurer Magaziner’s Back to Basics
investment strategy, which is designed to strengthen performance and reduce risk.
Among the changes included in Back to Basics is an exit from most of the pension
system’s hedge fund investments. Equity hedge funds were the only part of the pension
portfolio to post a negative return for the year.
Among the strongest performing asset classes in 2016 were infrastructure, which
earned an 18% return; real estate, which earned 9.8%; and private equity, which
returned 9.2%.
All performance is reported net of fees and expenses.