Minnesota State Board of Investment, St. Paul, on Aug. 14 reported $93.7 billion in defined benefit assets as of June 30, the close of SBI’s fiscal year, buoyed by a net investment gain of 12.3%.
The board’s latest return topped its composite benchmark by almost 50 basis points, according to a performance report on the SBI website.
Minnesota reported an 8.9% net investment return for the prior fiscal year.
The latest returns marked a continued recovery from the annualized net gain of 4.6% the state reported for the three-year period through June 30, in the wake of a 6.4% loss for the fiscal year through June 30, 2022. That decline followed the start of an aggressive U.S. rate-hiking cycle that March.
Longer term, combined gains for the three biggest pension pools overseen by the State Board of Investment — Minnesota’s Public Employees Retirement Association, Teachers Retirement Association and the State Retirement System — remained solid, with annualized net returns of more than 8% for the 10- and 20-year periods through June 30 outpacing Minnesota’s composite benchmark by more than 2 percentage points.
Minnesota’s asset allocation mix at the close of its latest fiscal year hewed closely to the State Board of Investment’s policy targets. The board reported $47.3 billion in public equities, or 50.5% of the total defined benefit pool, marginally above its 50% target, and just over $23 billion apiece in fixed income and private markets, slightly shy of SBI’s respective 25% targets for both market segments.
Public equities remained the dynamo behind the latest year’s returns, with a 19.8% net gain that topped Minnesota’s composite equity benchmark by 0.5 percentage points. U.S. equities led the way with a 23.5% return, followed by international equities, up 12.8% and global equities, up 12%.
Minnesota’s broad fixed-income allocations delivered a 2.7% net return for the latest fiscal year, topping the pension fund’s composite benchmark by 1.2 percentage points.
The SBI’s private markets exposures, meanwhile, posted a combined 7.7% net gain, with returns of just less than 10% for the pension fund’s private equity and private credit allocations more than offsetting a 6.7% decline on its real estate investments.
Together with other asset pools, including $30 billion in state cash accounts and a $15 billion “participant directed investment program,” the Minnesota State Board of Investment was overseeing $146 billion in assets as of June 30.
Officials at the State Board of Investment couldn’t immediately be reached for comment.
The investment report posted on the SBI website, meanwhile, noted that the portfolio “benefited from a positive contribution from active management” over the past year, in segments such as domestic equities, international equities and core/core-plus fixed income.
