Rhode Island’s Pension Fund Outperforms Benchmark with 11.6% Return

Plan earns $851 million in fiscal 2017.

The $8 billion Rhode Island pension fund generated an 11.62% return for the fiscal year ending on June 30.  The plan outperformed its benchmark by 28 basis points and earned $851 million over the 2017 fiscal year.

“Our Back to Basics investment approach is improving investments returns for the fund,” Rhode Island  Treasurer Seth Magaziner said in a press release. “My office will continue to work on strengthening retirement security for our public employees.”

Magaziner last September introduced the Back to Basics plan last September, which partly focuses on reducing the fund’s hedge fund allocation by more than $500 million over the next two years, and reallocating this capital to more traditional asset classes. As of the end of June, the plan’s equity hedge fund allocation and real return hedge fund allocation were 5.2% and 4.2%, respectively, according to internal documents compared to last year’s allocation of 7.7% and 6.6%, respectively. 

Back to Basics also focuses on growth and income strategies, which consist of low-fee index funds and strategies to protect the pension system against market risks such as inflation and volatility.

The plan also slightly outperformed its benchmark over the 10-year period ending on June 30, with a 4.4% return compared to the portfolio benchmark yielding 4.3%. Further, the plan lowered its overall assumed rate of return to 7%  from 7.5% earlier this year.

Other recent changes within the plan included the hiring of  Alec Stais as CIO in May. Stais, a former Goldman Sachs managing director, oversees the day-to-day administration of the treasury’s investment office.


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