Florida State Pension Fund Returns 8.99%

Preliminary fiscal-year returns add $6.8 billion to fund.

Florida’s State Board of Administration (SBA) reported that its $160.4 billion state pension fund earned a “very” preliminary return of 8.99% for fiscal-year 2018 that ended June 30.

“Preliminary figures for the Florida Retirement System Pension Plan project returns for fiscal year 2017-18 just shy of 9%,” Ashbel Williams, the fund’s chief investment officer,  said in a statement emailed to CIO. “Fiscal year-end valuations for our private market assets (real estate, private equity, etc.) have not yet been posted, which should further improve the return.”

The 8.99% equals a $6.8 billion increase after benefit payments and outflows of approximately $600 million to $650 million per month, John Kuczwanski, SBA’s manager of external affairs, told CIO. Kuczwanski also said the preliminary returns were 0.71% above the fund’s benchmark.

For fiscal year 2017, the fund reported a 13.77% return on investments, and total assets of $153.6 billion. The fund has returned 6.43%, 7.27%, and 5.6% over the last three, five, and 10 years, according to its most recent monthly performance report as of the end of April. The fund’s asset allocation at the end of April was 56.5% in global equity, 18.6% in fixed income, 8.8% in real estate, 8.0% in strategic investments, 6.9% in private equity, and 1.2% in cash and cash equivalents.

Last month, Moody’s Investors Service upgraded Florida’s general obligation (GO) rating to Aaa from Aa1. The firm said the upgrade reflected a sustained trend of improvement in Florida’s economy and finances, including low state debt and pension ratios that compare well with other Aaa-rated states.

“Florida’s stable outlook for the GO and GO-related ratings reflects our expectation that sound fiscal management practices will continue through future economic cycles and administrations,” said Moody’s, “including the state’s continued willingness to raise revenues and cut spending to address budget imbalances and maintain strong reserve levels.”

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