Penn SERS returns 11.1% in 2020

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The $ 35.1 billion Pennsylvania State Employee Retirement System (Penn SERS) posted an 11.1% return on investment net of fees for the year ended Dec.31. / 40, which gained 13.5% and 13.6% respectively.

“The past year, 2020, has brought an array of challenges, resulting primarily from the COVID-19 pandemic,” Penn SERS Executive Director Terrill Sanchez and Chief Financial Officer (CFO) Sara McSurdy wrote in the annual financial report. full fund. “Thanks in part to our investment strategy and the asset allocation adopted in December 2019, SERS ended 2020 on a positive note.”

The fund recorded three, five and 10 year annualized returns of 8.0%, 9.1% and 8.0%, respectively, below the returns of its benchmark index of 9.1%, 9.7% and 8.8% over the same periods, respectively.

Over the longer term, the portfolio’s annualized returns over 15, 20 and 25 years were 6.5%, 6.4% and 7.9%, net of fees, respectively. Long-term benchmark comparisons were not available. Penn SERS ‘unfunded actuarial liability is $ 22.4 billion and its funding ratio is 59.4%.

Emerging market equities and US equities were the best performing asset classes in the portfolio, with respective returns of 24.5% and 21.3%. They both beat their benchmark returns by 18.4% and 20.9%, respectively.

Private equity returned 18.4%, ahead of its benchmark, which returned 13.1%, while Treasury Inflation-Protected Securities (TIPS) gained 11% for the year. International developed market equities returned 9.6%, followed by private credit and fixed income securities, which returned 9.1% and 5.8%, respectively. Real estate was the worst performing asset class in the portfolio, with a return of 2.1%, although it was still well above the return of its benchmark index of 0.3%.

The fund’s target asset allocation is 26% in bonds, 25% in US equities, 14% in private equities, 13% in international developed markets, 8% in real estate, 4% in emerging markets equities, 4% in private credit, 4% in tips and 2% in cash.

The fund’s main US stocks are Apple, Microsoft, Amazon, Facebook, and Google owner Alphabet’s Class C stocks. The top 10 is rounded out by Tesla, Alphabet A shares, Johnson & Johnson, Berkshire Hathaway and Mastercard. And the largest non-US holdings in the portfolio are Brookfield Asset Management, Linde, Accenture, Medtronic, and Taiwan Semiconductor Manufacturing Corp. They were followed by Keyence, LVMH Moet Hennessy Louis Vuitton, Shin-Etsu Chemical Co., AIA Group, and CSL Ltd.

Penn SERS recently lost CIO Seth Kelly, who resigned his post last month after less than a year on the job. The fund’s board has appointed deputy IT director James Nolan as interim IT director while he searches for Kelly’s permanent successor.

Related stories:

Penn SERS CIO Seth Kelly resigns

Japan’s $ 1.7 trillion pension giant breaks record, earns more than 25% in 2020

AustralianSuper jumps record 20.4% for fiscal 2021

Tags: 2020, ROI, Penn SERS, Pennsylvania State Employee Retirement System


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