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The Massachusetts state pension fund said on Tuesday that its investments gained 4.9 percent in the first quarter, pushing assets to $65.1 billion.

The return, equal to $3 billion, outperformed an internal benchmark of 4.2 percent. The strongest categories were emerging markets equity, up 12.9 percent, and international stocks, with a gain of 7.4 percent. The weakest area was bonds.

While stock markets have surged this year on expectations of tax cuts by the Trump administration and of a pickup in economic growth, Michael Trotsky, executive director of the Pension Reserves Investment Management Board, warned against getting too exuberant.

“This is not a market to be layering on risk,” Trotsky said at a public board meeting where the fund’s results were released. “We believe this is a good time to remain somewhat cautious,” he said.


The fund’s 12-month trailing return through March 31 was 11.1 percent. That was better than a hypothetical portfolio of 60 percent stocks and 40 percent bonds, which was up 9.2 percent.

But the fund’s 12-month trailing gain underperformed its internal benchmark of 11.4 percent. Officials said that’s partly because some of the fund’s active managers favor “high-quality” stocks, while lower quality climbed in the period.

Meanwhile, the fund staff is seeking new ways to manage money internally to save costs. It’s also looking at a new options strategy to hedge against falling markets in the future.

Trotsky also told the board the staff is at risk of being too lean, with fewer than half its staff of 40 involved in investments. He is asking managers to hire new staff strategically, as the fund tackles new projects.

“We are firing on all cylinders,” Trotsky said. “We manage this large, complex fund with fewer people than our peers.”

The Harvard University endowment, roughly half the pension’s size in assets, had 230 employees at the end of last year. Half are being laid off, amid a restructuring there.


Peter MacKinnon, president of SEIU Local 509 and a social worker, spoke at the meeting to press the pension fund to divest of fossil fuel investments. Such a move requires an act of the Legislature.

Beth Healy can be reached at beth.healy@globe.com.