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Pension Funds

North Carolina returns 7.3% for fiscal year

North Carolina Retirement Systems, Raleigh, returned 7.3% for fiscal year 2018, State Treasurer Dale Folwell reported Thursday.

Mr. Folwell said while the $98.2 billion pension system, of which he is sole trustee, topped its 7% assumed rate of return for the 12 months, longer term it did not; the 20-year annualized return as of June 30 was 6.1%. The pension fund's benchmark return for the 12 months was 6.1% and its 20-year benchmark was an annualized 5.6%. It returned 10.8% in the previous fiscal year.

In April, North Carolina lowered its assumed rate of return to 7% from 7.2%, beginning with the Dec. 31, 2017, valuations. The change reduced the funded status of the affected systems by two to three percentage points, Mr. Folwell said.

North Carolina investment management officials also have reduced investment manager fees by $86 million since January 2017, and are projected to save $344 million over four years, he said.

The fund's strongest performer in the fiscal year was private equity, which returned 16.3%, followed by non-core real estate at 15.9%, public equity at 12.5%, inflation-sensitive and diversifier investments at 6.8%, opportunistic fixed income at 6.7% and a multistrategy portfolio at 6.3%. Investment-grade fixed income was down 0.4%, and cash holdings increased 1.4%.