Florida Retirement System DB fund returns 13.12% for fiscal year

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Ash Williams

Florida Retirement System's defined benefit pension fund returned 13.12% on its investments for the fiscal year ended June 30, outperforming its customized benchmark by 1.11 percentage points, according to preliminary figures released Tuesday by the Florida State Board of Administration, Tallahassee, which oversees the plan.

In the previous fiscal year, the plan returned 0.29%, exceeding its benchmark by 0.77 percentage points.

The plan had $134.2 billion in assets as of June 30, an FSBA statement said. That total is $9.65 billion more than the previous fiscal-year-end total after net distribution of $6.2 billion to participants.

“All asset classes earned positive returns during the fiscal year,” led by global equity with 18.56%, the statement said. Global equity outperformed its benchmark return of 17.23%.

Strategic investments, primarily hedge funds, distressed debt and timberland, returned a combined 16.16%, outpacing its 9.85% benchmark return. Real estate returned 14.92%, outperforming its 10.12% benchmark return. Both private equity primary and private equity secondary investments returned 10.65%, both underperforming their benchmark returns, respectively, of 24.46% and 11.85%. Fixed income returned 0.38%, outperforming its -0.69% benchmark return, while cash returned 0.29%, outpacing its 0.05% benchmark return.

The FRS defined contribution 401(a) plan's investments, based on aggregate participant fund selection, returned 10.12%, also in the 12 months ended June 30, outperforming its customized benchmark's return of 9.68%.

In the previous 12 months, the 401(a) plan returned 1.07%, underperforming its benchmark by 0.01 percentage points.

The 401(a) plan had $7.9 billion in assets as of June 30, a record high. The 401(a) plan ended the previous fiscal year with $7.1 billion in assets.

Ash Williams, FSBA executive director and chief investment officer, said in the statement, “While we are always pleased to see a strong annual performance, our focus is on the long term — 20 and 25 years. For these periods, the (FRS DB) fund has generated (annualized) returns of 7.99% and 8.93%, respectively. Both outperformed their respective benchmark returns of 7.77% and 8.8%.

“The strong long-term performance can be attributed to continued prudent diversification of assets, cost controls and excellent fund manager selection,” Mr. Williams added.

As of Monday, the FSBA oversaw a total $168.1 billion, including the FRS' $137 billion defined benefit plan and $8.21 billion 401(a) plan.