The Massachusetts state pension fund reported a 12.7 percent investment gain for the fiscal year ended June 30, officials said Tuesday, up from a loss of 0.1 percent the prior year.
Buoyed by rising markets, the fund ended the year with $53.2 billion in assets, a record year-end figure, after adding $6.2 billion in value. The pension fund has rebounded significantly from 2009, when its assets plunged below $39 billion in the financial crisis.
The state came out slightly ahead of the nation’s largest public pension fund, the California Public Employees’ Retirement System, which posted a 12.5 percent gain for last year. For comparison, a hypothetical index of 60 percent global stocks and 40 percent bonds would have returned 10 percent for the year ended June 30.
Domestic equities performed best for the state pension board, with a 22.1 percent return that beat the Standard & Poor’s 500 stock index. Bonds were a weak point, falling 0.3 percent but beating their internal benchmark.
Hedge funds marked an improvement over recent years. They rose 12.2 percent as the state continued its program of investing directly in hedge funds, rather than through vehicles called fund-of-funds.
Michael Trotsky, the fund’s executive director, said the strong performance came despite a period of internal challenges, including filling jobs.
With that behind him, Trotsky said, “We have an aggressive agenda laid out for 2014.” That includes a goal to save $100 million a year in fees and expenses on investments, or 40 percent of the pension group’s budget. Managers are searching for alternatives to some low-volatility hedge funds and trying to reduce fees paid to investment managers.
State Treasurer Steven Grossman, who is chairman of the pension fund board, said some innovations rolling out this year could be a model for other public pension funds.