By Ted Nesi
The investment performance of Rhode Island’s pension fund continues to lag behind its peers under the new mix of assets adopted at Treasurer Gina Raimondo’s urging that relies more heavily on hedge funds.
Rhode Island’s $7.6-billion pension fund earned 11.07% during the 12 months ended June 30, according to Bank of New York Mellon Corp., the state’s custodial bank. The median public-sector pension plan with assets of at least $5 billion earned 12.43% over the same period, Wilshire Associates Inc. reported this month.
Rhode Island’s pension investments also grew more slowly over the three years and five years ended June 30 compared with the median plan of at least $5 billion, according to Wilshire and BNY Mellon. But Rhode Island’s return over the 10-year period ended June 30 was 7.42%, better than the median plan’s 7.23%.
Rhode Island’s plan also beat the internal benchmark it uses for comparison purposes over the last 10 years and the last five years, but lagged it over the last three years and the last 12 months:
Raimondo has acknowledged her new investment strategy, approved unanimously by the State Investment Commission in 2011, could reduce the upside potential for Rhode Island’s investments, but she argues the state will benefit over time because of a reduction in the risk and volatility of the portfolio.
“The State Investment Commission’s goal is to make sure that pension checks are there for when people retire,” Raimondo spokeswoman Joy Fox told WPRI.com. “The SIC strategy is working, delivering strong long-term return, while minimizing risk to provide retirement security.”
The median performance published by Santa Monica-based Wilshire comes from its Wilshire Trust Universe Comparison Service, which tracks more than 1,700 public and private investment plans that control more than $3.4 trillion in assets. Wilshire doesn’t disclose how many of those are public plans with at least $5 billion.
Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi
• Related: Taveras’s 13.4% pension return in Providence beats Raimondo’s 11.1% (Aug. 13)
