Philadelphia Public Employees posts 8.7% fiscal-year return

Philadelphia Public Employees Retirement System reported a net return of 8.7% for the fiscal year ended June 30.

The $8.4 billion pension fund's net return was above its policy benchmark return of 7.9% for the period, according to a performance report on the website of the Philadelphia Board of Pensions and Retirement.

For the three, five and 10 years ended June 30, the pension fund returned an annualized net 2.9%, 7.5% and 6.3%, respectively, compared with their respective benchmarks of 2.6%, 7.6% and 6.8%.

The pension fund had returned a net 7.6% for the fiscal year ended June 30, 2023.

For the most recent fiscal year, the pension fund likely benefited from strong market performance, particularly within domestic equities. For the year ended June 30, the Russell 3000 index returned 23.1%.

The top-performing asset class for the pension fund was indeed domestic equities, which returned a net 20.3% for the fiscal year ended June 30 (above its custom benchmark of 20%), followed by absolute return at a net 16.5% (8.5%); emerging markets equities, 12% (12.5%); international developed markets equities, 11% (10.7%); opportunistic fixed income, 9.5% (10.2%); public real estate, 5.7% (5.8%); infrastructure, 2.1% (2.3%); investment-grade fixed income, 2% (1.8%); private assets, -0.1% (-0.1%); open-end real estate, -9.1% (-10.1%); and private real estate, -13.8% (-13.8%).

As of June 30, the actual allocation was 30% domestic equities, 22.7% international developed markets equities, 11.9% each investment-grade fixed income and private assets, 5.8% cash, 4.8% infrastructure, 4.4% open-end real estate, 3.5% opportunistic fixed income, 3% emerging markets equities, 1% public real estate, 0.5% private real estate and the rest in absolute return.

The target allocation is 24% domestic equities, 21% investment-grade fixed income, 20% international developed markets equities, 12% private assets, 7% open-end real estate, 5% infrastructure, 4% cash, 3% opportunistic fixed income, 2% emerging markets equities, and 1% each private real estate and public real estate.