Maine Pension Fund Earns 10.3% in FY 2018

Investment returns decelerate in second half, rising only 2.5% since Jan. 1.

The Maine Public Employees Retirement System’s investments returned 1% during the fiscal fourth quarter of 2018, and 10.3% for the fiscal year ended June 30 net of fees, bringing its total market value to $14.3 billion. The fund returned 14.2% in fiscal 2017.

Although the quarterly returns fell short of its benchmark’s return of 1.5%, it easily surpassed its annual return of 8.5%. It is the 10th consecutive year of positive returns for the system, and the fund’s market value has now more than doubled since the low-water mark of the financial crisis in February 2009, when its market value was $7.1 billion.

The fund reported three-, five-, and 10-year annualized returns of 7.7%, 8.2%, and 6.3%, respectively, ahead of its benchmark’s three-, five-, and 10-year annualized returns of 6.9%, 7.4%, and 5.8% respectively. However, over the long term, the fund and its benchmark were practically identical, with 20-year annualized returns of 5.9% versus 5.8%, and 30-year annualized returns of 8.2% versus 8.1%.

Despite the double-digit returns, the fund appeared to lose steam during the second half of the fiscal year as the investments returned only 1.5% and 1% during the last two quarters respectively.

As of June 30, the fund’s asset allocation was 33.3% in public equity, 13.2% in private equity, 10.4% in infrastructure, 10.4% in US government, 9.1% in traditional credit, 8.9% in real estate, 8.1% in risk diversifiers, 4.2% in natural resources, 1.9% in alternative credit, and 0.6% in cash.





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