The investment portfolio of the $44.1 billion Nevada Public Employees’ Retirement System (NPERS) returned 8.5% for the fiscal year ended June 30, just beating its policy benchmark of 8.3%, and ahead of its target long-term return rate of 7.5%.
The retirement system also reported three-, five- and 10-year annualized returns of 9.7%, 7.1%, and 9.9%, respectively, compared with its benchmark’s returns of 9.3%, 7.0%, and 9.9% respectively.
Not surprisingly, private equity proved to be the portfolio’s top-performing asset class for the fiscal year, returning 18.4%, while private real estate returned 8.1% giving the total private markets asset class a return of 13.4% for the year, and outpacing its benchmark’s return of 10.2%.
US equities returned 10.4% for the year, which was below the benchmark return of 14.2%, while US bonds returned 7.3%, just edging out its benchmark’s return of 7.2%. International stocks were the worst-performing assets for the portfolio, eking out a 1.8% return for the year, but still matching its benchmark’s return.
Over the past 10 years, private equity has been the portfolio’s top-performing asset class with annualized returns of 15.7%, although combined with private real estate’s 9.2% annualized returns during that time, the total private markets asset class returned 12.4% over 10 years, which was below the benchmark’s return of 13.3% during that time period.
US stocks returned 14.7% annualized over the past 10 years, ahead of the benchmark return of 11.4%, while international stocks returned 7.3% during that time, just beating its benchmark’s return of 7.0%. And US bonds had annualized returns of 3.9% over the past 10 years, compared with its benchmark’s return of 3.6%.
The asset allocation of the portfolio is 46.1% (42% target) in US stocks, 25.3% (28% target) in US bonds, 18.4% (18% target) in international stocks, 5.4% in private equity (6.0% target), 4.6% (6.0% target) in private real estate, and 0.2% (0% target) in cash.
The equities portion of the portfolio is heavy on tech and blue chip stocks, as its top equity positions are Microsoft, Apple, Amazon, Facebook, Berkshire Hathaway, Johnson & Johnson, JPMorgan Chase, Alphabet, and Exxon Mobil.
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