US - The US$30bn Pennsylvania State Employees' Retirement System's (PA SERS) returns fell sharply in the first half of the year to 6.2%, but remained in a strong position.
Thanks to an exceptionally strong second half of 2005 - led by strong private equity and real estate returns - the US$30bn fund posted an overall return of 17.1% over a 12 month period.
But Eric Henry, executive director, pointed out the 6.2% return in H1 already constituted three-quarters of the earnings necessary to meet or exceed the fund's actuarially assumed rate of return for the fourth year in a row.
He described the results through the first two quarters as “encouraging,” and said the fund was currently 92.9% funded.
Peter Gilbert, CIO, attributed the fund’s performance over H1 to strong returns from Inflation protection, international equities, real estate, and private equity.
Gilbert added that said financial markets had generally continued to show upward movement since the close of the second quarter on June 30, but added: “It is far from a foregone conclusion that we will be able to again meet or exceed our 8.5% assumed rate of return for the fiscal year."
"Even the broadly diversified investment policy that the Board has adopted cannot fully insulate the fund from all the risks inherent in the global economy.”
SERS board chairman Nicholas Maiale also lauded the performance, but warned that, with uncertainties in both domestic and global markets, challenges remained.
"One thing that is clear is that our success to date is attributable to the broad diversification of our portfolio," said Maiale.
"We believe that diversification will continue to serve us well through the remainder of this year and in the future.”
PTL has appointed Karein Davie as a client director in its Birmingham office.
The level of interest rate hedging increased to £29.5bn of liabilities in the second quarter as pension funds continued to de-risk, according to BMO Global Asset Management's research.
UK inflation has risen for the first time since November to 2.5% in July, up from 2.4% in June, thanks to rising fuel costs and the price of computer games.
The number of DB pension scheme trustees targeting a buyout with an insurer has increased significantly in the past five years, latest research from Willis Towers Watson shows.