The state’s pension fund posted a slight loss on its investments – one-tenth of one percent – in the fourth quarter as its portfolio of bonds dragged down overall performance.
The Department of State Treasurer reported this week that the pension fund, which provides retirement benefits for more than 950,000 state employees and teachers, ended the calendar year with $89.1 billion in assets. That’s down from $89.8 billion three months earlier.
The fourth quarter marked the last quarter that former state Treasurer Janet Cowell, a Democrat who chose not to seek re-election, was in charge of the pension fund’s investments. Cowell was succeeded by Dale Folwell, a Republican.
Folwell, who argued during the election campaign that the pension fund’s assumed annual rate of return of 7.25 percent needs to be lowered, said in a prepared statement that the fund hasn’t averaged those kinds of returns in 15 years.
Folwell added that although the pension plan’s funding is solid, “in this low interest rate environment, being more realistic about returns going forward will help North Carolina maintain its ‘AAA’ bond rating.”
During the quarter, stocks, which make up more than 40 percent of the pension fund, rose seven-tenths of a percent. But investment-grade bonds, which comprise more than a quarter of the fund, fell 3.5 percent.
Other investment categories include: inflation-sensitive investments, up 2.3 percent; opportunistic fixed income, up 3 percent; and private equity, up 1.8 percent.
The results for all of 2016 included: stocks, up 7.3 percent; inflation-sensitive investments rose 7.2 percent; multi-strategy rose 6.0 percent; opportunistic fixed income rose 7.1 percent; private equity increased by 6.0 percent; and investment-grade bonds rose 3.2 percent.