According to the Boston Globe, the fund closed the year with $50.3 billion in assets, adding $9 billion in value over the prior 12 months. The pension portfolio closed fiscal 2011 having nearly climbed back to where it was before the financial crisis.
The strong returns came on the heels of one of the fund’s worst periods, as the global financial turmoil of 2008-2009 slashed its assets to $37.7 billion.
Grossman, who is chairman of the pension fund’s board, said he and the staff were “pleased and gratified’’ with the performance for 2011. Still, he remained cautious amid worries over the national debt crisis and the economy, the news report said.
Despite a falling market in May and early June, the Massachusetts pension fund regained ground in recent weeks and notched its second-best year. The fund’s best performance ever, in 1986, was a 28.1% return, according to pension officials.
The Globe said the latest year’s performance was led by a strong stock market, as the Standard & Poor’s 500 index rose 30.7%. For the pension fund, global equities led the way, following by private equity and real estate – areas that suffered during the downturn – and alternative investments such as timber. Last year was a transition period for the fund, with Grossman and executive director Michael Trotsky both in their first year on the job.
It was a year in which officials reexamined the way the state invests in hedge funds and launched a program to invest in them directly, instead of through middleman funds. They also are taking measures to better manage risk and are looking harder at underperforming investment managers.Trotsky attributed the year’s gains to sticking to the board’s plan and not taking a knee-jerk reaction to losses in the financial crisis.