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State’s pension fund posts its biggest investment gain ever

The retirement pool for more than 300,000 state employees, teachers, and other municipal workers returned nearly 30 percent in the fiscal year that ended June 30.

Michael Trotsky (right) is the executive director and chief investment officer for the Massachusetts Pension Reserves Investment Management Board.
Michael Trotsky (right) is the executive director and chief investment officer for the Massachusetts Pension Reserves Investment Management Board.The Boston Globe

The pension fund for more than 300,000 state employees, teachers, and other municipal workers rung up its best year ever, as financial markets continued to climb following an early 2020 meltdown caused by the outbreak of COVID-19.

The Massachusetts Pension Reserves Investment Management Board said Tuesday that the retirement pool’s net investment return for its recently ended fiscal year was 29.5 percent, the highest since its creation in 1986. The gain exceeded the fund’s performance benchmark by 8.9 percentage points, beating the previous record set in 2000, PRIM said.

To be sure, the 12 months through June were a good time for most investors. The Standard & Poor’s 500 index climbed 41 percent, while the tech-heavy Nasdaq was up 45 percent. The California Public Employees’ Retirement System, the largest public pension fund in the country, returned 21.3 percent, while in Rhode Island, the state fund gained 25.6 percent.

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“The fiscal year 2021 record performance is a direct result of pragmatic strategies, informed analysis, and deliberate execution delivered by the talented PRIM staff in both up and down markets,” Massachusetts Treasurer Deborah Goldberg, who is chair of the PRIM board, said in a statement.

The fund eked out a 2 percent gain in fiscal 2020 after the sharp drop in the markets in March.

In dollar terms, the Massachusetts fund’s investments produced a gain of $22.1 billion, or $6.7 billion more than its benchmark, which is a way to measure how it performed compared with market indexes. PRIM’s private-equity portfolio led the way with a return of 70.5 percent, said Michael Trotsky, executive director and chief investment officer.

“We believe we have engineered a portfolio that performs well in a variety of market conditions,” Trotsky said in the statement.

PRIM allocates money among seven asset classes, including stocks, bonds, private equity, real estate, and timberland. The board oversees outside firms that manage the investments.

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The fund has returned an annual average of 11.7 percent over three years, 11.5 percent over five years, and 9 percent over 10 years.



Larry Edelman can be reached at larry.edelman@globe.com. Follow him on Twitter @GlobeNewsEd.