North Carolina Retirement Systems’ pension plan reported gains of 13.5% for calendar year 2017, surpassing its benchmark of 12.8%, and raising its total asset value to $98.3 billion from $89.1 billion at the end of 2016.
The gains are more than double the 6.3% the pension fund earned in 2016.
Public equity, which makes up nearly 40% of the total fund, rose 24.4%, while its multi-strategy portfolio rose 13.6% for the year. Non-core real estate and private equity gained 12.4% and 12.0%, respectively, while inflation-sensitive and diversifier investments increased by 8.6%. Meanwhile, “opportunistic fixed income,” and investment-graded fixed income rose 7.1% and 4.4%, respectively. The figures are reported net of all fees and expenses.
“Although we’re very pleased with that,” said North Carolina Treasurer Dale Folwell of the returns in a video statement, “it’s important to realize that the pension plan has not achieved its 7.2% average rate of return the last 20 years.”
The fund, which is the 10th largest public pension in the US, significantly reduced expenses in 2017. It said that during the first year of Folwell’s administration, fees paid to Wall Street investment managers were reduced by more than $60 million for a projected savings of $240 million over four years.
The fund also moved $100 million in passive indexing funds under in-house management in 2017 in order to further reduce fees, while maintaining performance as measured by the Russell Top 200 index strategy and the Russell Mid Cap index strategy.
The current asset allocation of the pension fund is 52.4% growth, 34% rates and liquidity, 11.7% inflation sensitive diversifiers, and 1.9% multi-strategy.