Arkansas Public Employees returns 10.4% for fiscal year

Arkansas Public Employees’ Retirement System, Little Rock, at an Aug. 21 board meeting, reported investment returns of 10.4% for its fiscal year ended June 30, lifting the value of the pension fund's portfolio to $11.5 billion.

While the annual gain improved on APERS' prior year return of 8.8%, it trailed the public pension fund's benchmark return of 11.3% for the latest fiscal year.

The public pension fund reported an 18.5% gain on its 40% — or $4.5 billion — allocation to domestic equity, topping the 10.9% return for the quarter of its portfolio invested in international equities.

The pension fund’s 17.3% fixed-income allocation returned 5.5%.

The value of APERS’ 3.4% allocation to private equity, meanwhile, jumped by 24.6% to $388 million.

For the year, the system's 14.1% allocation to real assets was its lone loser, declining 6.4%.

At the meeting, some board members expressed concern that APERS’ returns — in a peer universe of 54 public pension funds with more than $10 billion in assets — remained below median on a three- and five-year basis. The median for past three years was 3.95%, while APERS' returns was 2.4%. The median for past five years was 8.1%, while the pension fund's was 7.65%.

In response, the board’s investment consultant Callan explained that much of that underperformance was tied to the fact that APERS' private equity program was at a relatively early stage of development.

APERS’ private equity exposure of 3.4% as of June 30 remained below the pension fund’s 7% target, although still within its policy range of between 2% and 12% of the portfolio.

The pension fund’s 24.6% allocation to international equity, meanwhile, remained above its target of 17%.