The Massachusetts state pension fund ended fiscal year 2021 with the highest return in its history and saw its assets swell to a record $95.7 billion.
The 29.5 percent return net of fees beat the Pension Reserves Investment Trust fund’s benchmark by 8.9 percent, making it the highest fiscal year return since the 25.6 percent return realized in the fund’s first year, 1986. It is also the highest relative return since the fund beat its 2000 benchmark by 5.9 percent.
Michael Trotsky, executive director and chief investment officer of the Massachusetts Pension Reserves Investment Management Board, presented the fund performance report during a meeting of PRIM’s Investment Committee on Tuesday morning.
“We’re pleased with a strong one-year performance but even more pleased that over long periods and through strong markets and market corrections, the PRIT fund has proven to be high performing, resilient, and cost-effective. The PRIT fund’s trailing three-, five- and 10-year returns remain strong and consistently above benchmarks,” Trotsky said. “We also believe our innovative and acclaimed work over the last 10 years in which we developed our own proprietary and statistically driven tools for asset allocation and also manager selection is paying off. We have successfully engineered a portfolio that performs well as, as you’ve seen, in a variety of market conditions.”
The record return means the PRIT fund saw a net investment gain of $22.1 billion in fiscal 2021, $6.7 billion more than the fund’s benchmark return. The fund paid out a net $1.2 billion in benefits to retirees during fiscal 2021. The retirement funds of state employees, teachers and many municipal employees in Massachusetts are invested through PRIM.
“Both the pension beneficiaries and the taxpayers of Massachusetts are well served by PRIM. These large gains help secure pension benefits to more than 300,000 beneficiaries and also solidify the Commonwealth’s financial position,” Treasurer Deborah Goldberg, who oversees PRIM, said.
The fund posted a return of 16.4 percent from July 1 through Dec. 31, outperforming its 12.5 percent benchmark for the first half of fiscal 2021. That topped a record for a half-year return that had stood since June 1986, officials said in February, and the PRIT Fund ended calendar year 2020 having produced a return of 12.1 percent, beating its benchmark of 10.8 percent.
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