PA Teachers Fund Ends FY in the Black

August 19, 2003 (PLANSPONSOR.com) - The Pennsylvania teachers retirement system may have turned in a 2.7%-gain in the latest fiscal year driven by a stronger equity market, but that was still far below its own performance prediction.

In addition to the fiscal year numbers, the $42-billion Pennsylvania Public School Employees’ Retirement System (PSERS) said in an announcement that it had racked up a 12% advance for the quarter ending June 30 and a 9.2%-return for the calendar year. The system’s fiscal year ended June 30.

PSERS has trailed the fund’s returns target of 8.5% annual, which it has not met since it posted a 12% advance during the tech stock bubble in 2000. The fund’s investments lost money during the bear market fiscal years 2001 and 2002.

“Throughout this difficult period, we have remained confident in our professional staff and investment managers, confident that our diversified portfolio would help us weather the downturn, and confident that the markets would once again improve, said PSERS’ Chairwoman and State Treasurer Barbara Hafer. “These latest financial results show our confidence was well-placed.” 

Hafer cited the gains as vindication for the fund’s practice of hiring hundreds of private money managers, at a cost of about $150 million a year, to parcel investments across the stock, bond, and alternative-investment markets. She has also defended the fund’s performance in a legal and public relations battle with critics such as Auditor General Robert Casey Jr., who wants to audit the fund’s money-manager hiring practices over Hafer’s opposition (See  Keystone State Pension Audit Fray Continues Escalating ).

As of June 30, 2003, PSERS has 44.2% of its assets in domestic stocks, 17.8% in international stocks, 20.8% in domestic and international fixed income investments, 8.9% in alternative investments, 6.7% in real estate, and 1.6% in cash and cash equivalents.

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