Chicago Laborers returns 9.7% for fiscal year

Chicago Laborers' Annuity & Benefit Fund posted a net return of 9.7% for the fiscal year ended Dec. 31.

The $1.1 billion pension fund's return fell short of its policy benchmark return of 11.3% for the period, according to an investment report on its website.

Although the return was more than 150 basis points short of its benchmark, the positive return likely provides welcome news for the severely underfunded pension plan. In its most recent actuarial valuation report for the pension plan, actuarial consultant Gabriel Roeder Smith calculated its funding ratio as 44.5% on an actuarial value basis as of Dec. 31, 2022.

For the three, five and 10 years ended Dec. 31, the pension fund returned an annualized net 2.1%, 7.8% and 5.6%, respectively, below their respective benchmarks of 3.8%, 7.9% and 6.1%.

The pension fund returned a net -13.3% for the fiscal year ended Dec. 31, 2022.

The reversal of the previous year's negative returns was likely due to market recoveries in both public equities and fixed income. For the year ended Dec. 31, the Russell 3000 index and Bloomberg U.S. Aggregate Bond index returned 26% and 5.5%, respectively, a dramatic turnaround from their respective returns of -19.2% and -13% the previous year.

The investment report provided only partial returns by asset class for the most recent fiscal year. Total equities returned a net 18.4% for the period, below the benchmark return of 22.2%; while total fixed income returned a net 6.3%, below its benchmark return of 7.1%.

As of Dec. 31, the actual allocation was 48.2% equities, 18.2% fixed income, 11.2% real estate, 9.8% private markets, 7.8% hedge funds, 3% real assets and 1.8% cash/other.

The target allocation is 50% equities, 20% fixed income, 10% each hedge funds and real estate, 7% private markets and 3% real assets.