The investment portfolio achieved a 10.2 percent annual gross return over the 30-year performance period. That put it first among peer public investment funds in the U.S. with more than $1 billion in assets, said ERB Chief Investment Officer Bob Jacksha.
The ranking is different from typical performance comparisons for short-to-medium-term returns ranging from one to 20 years. That’s because far fewer peer funds have been around for 30 years of operations. As a result, only 19 were included in the 30-year comparison ranking, compared to 98 in similar studies of one-year returns.
“The longer out you go, the smaller the number of funds,” Jacksha said. “It’s among those 19 funds in the 30-year period that we ranked No. 1.”
Overall, the ERB hit a record level of $11.4 billion in total funds in the third quarter. That compares to $9.6 billion prior to the recession that started in 2008, and just $6.2 billion in March 2009, after the financial crash battered the ERB and other funds nationwide.
ERB funds pay retirement benefits for public school and university retirees. That includes about 61,000 active employees currently paying into the system, plus 42,000 retirees.
In recent years, the state has struggled to shore up the ERB and the Public Employee Retirement Association fund, which includes about 55,000 workers and 31,000 retirees. Both funds have large unfunded liabilities because they pay out much more than receive annually.
In 2013, a new law took effect that increased contributions into both funds from active members and from the state, while restricting some benefits. That, together with improving investment returns, is expected to eliminate unfunded liabilities over the next 30 years.
Notwithstanding the ERB’s No. 1 ranking for 30-year performance, investment comparisons for most shorter-term return periods show the ERB is actually performing below most other peer funds nationwide.
For the second quarter of FY 2015, which ended Dec. 31, the ERB ranked in the 26th percentile among its peers for one-year performance. But it registered in the 70th percentile for three and five years, and 51st for 10 years, according to the last quarterly report from the Legislative Finance Committee.
Still, the fund is hitting at or above its annual return target of 7.75 percent for most periods measured, Jackshaw said. Returns reached 7.7 percent for one year during the January-March quarter, 9.2 percent for three years, 8.8 percent for five and 7.7 percent for 20 years.
It missed its target for the ten- and fifteen-year periods, reporting 6.9 percent and 4.6 percent returns, respectively. Those periods included the losses incurred during the economic downturn at the turn of the century and the Great Recession in 2008-2009.
In general, investments are doing well, said ERB Executive Director Jan Goodwin.
“We’ve got a great team of solid investment professionals and a board that’s very engaged and supportive,” Goodwin said. “It’s a real team effort.”