Rhode Island Pension Fund Earns $64.2 Million in August

Despite outperforming its benchmark, the returns were less than half that of July.

The Employees’ Retirement System of Rhode Island (ERSRI) earned $64.2 million in investment gains during August, bringing the fund’s total asset value to $8.17 billion.

The returns translate to gains of 0.79% net of fees for the month, which outperformed its benchmark of 0.77%, and a 60-40 fund, which would have only returned 0.58%. However, despite the outperformance, the returns were less than half that of what the fund earned the previous month, when it returned 1.7% and added $137 million in asset value.

For August, the total portfolio value increased by approximately $11.8 million, and the $64.2 million in positive investment performance was offset by $52.4 million of transfers to meet pension payroll in excess of pension contributions, according to ERSRI.

The fund’s one-year return for the 12-month period ending on Aug. 31 was 11.27%, which surpassed the plan’s benchmark of 10.95% as well as a 60-40 portfolio, which would have returned 10.21%.

“Our ‘Back to Basics’ investment strategy continues to deliver positive performance for retirees and taxpayers,” said Rhode Island Treasurer Seth Magaziner in a statement. “I am committed to strengthening the state’s finances for all Rhode Islanders and that includes bringing added stability to the state’s pension fund.”

The so-called “Back to Basics” investment strategy, which was unveiled last year, moves the state’s investments out of most hedge funds and into more traditional investments that are designed to grow during bull markets, while providing stability during down markets. Just last week, the Rhode Island General Assembly passed legislation that will create a legal requirement to maintain the investment policy, which also requires investment managers to publicly report fees and performance.

For the calendar year-to-date, the total portfolio has increased by $474.4 million, with net gains of $716.3 million that were offset by $241.9 million in pension payments. The portfolio’s 9.42% net return was below the strategic benchmark of 9.43%, and a 60/40 fund, which would have returned 10.31%. For the fiscal year-to-date, the total portfolio value increased by approximately $129.3 million.

Over a three-year period, the ERSRI portfolio returned 4.98% net of fees, compared with the plan benchmark of 4.84%, and a 60/40 portfolio, which would have earned 4.55%. Over five years, the ERSRI portfolio earned 7.79% net of fees, outperforming the plan’s benchmark of 7.69% and a 60/40 benchmark of 7.21%.

The fund’s assets are allocated 57.6 % in equity, 11.9% in fixed income, 3.3% in cash, and 27.2% in “others,” which includes investments such as real estate credit and absolute return funds.

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