Pennsylvania State Employees to shift about $2.2 billion into passive investments

Pennsylvania State Employees' Retirement System, Harrisburg, continued restructuring the public markets portfolio by committing to shift about $2.16 billion into passive investments, confirmed Pamela Hile, spokeswoman for the $27 billion pension plan.

At its April 26 meeting, the board agreed to reallocate $200 million from cash to a Russell 3000 index fund managed by Mellon Capital Management. This is a new addition within the multistrategy asset class. The board approved the establishment of the multistrategy asset class at its March 8 meeting.

Also, over time, PSERS will transition:

  • about $1.4 billion from the equity portfolio to the BlackRock (BLK) MSCI World ex-U.S. index, a new fund for the plan;
  • about $475 million from core fixed income, with about $180 million going to cash and the remainder going to a Mellon Capital Management bond index, an existing fund for the plan with about $578 million in plan assets; and
  • about $260 million in actively managed U.S. Treasuries to a PIMCO U.S. Treasury index fund, also a new fund for the plan, managed by Pacific Investment Management Co.

How exactly those movements will be funded will be available at the next meeting on June 14, said Ms. Hile.

This move shortly follows Pennsylvania Gov. Tom Wolf and state Treasurer Joe Torsella publicly urging the state pension plans to reduce investment costs by moving more toward passive investing.