The Arkansas Public Employees Retirement System's investments increased in value by $17 million last quarter to $7.502 billion, an investment consultant said Wednesday.
The system's investment return was 0.92 percent in the quarter that ended March 31, and the return ranks in the top 59 percent of the nation's public pension systems, the Chicago-based investment consultant Callan Associates Inc. said in a report to the system's board of trustees.
The stock markets followed the dropping price of oil in the period in January through about Feb. 11 before these markets largely rebounded for the rest of February and March, said Ryan Ball, senior vice president of Callan Associates.
The system's investments were valued at $7.575 billion at the end of last month, system Executive Director Gail Stone said after the trustees' meeting.
The Public Employees Retirement System is state government's second-largest retirement system, behind the Arkansas Teacher Retirement System. The public employees system includes more than 75,000 working and retired members and more than $7 billion in investments, while the teachers' system includes more than 100,000 working and retired members and more than $14 billion in investments.
The Public Employees Retirement System's domestic stock market investments totaled $2.87 billion at the end of March after recording an investment return of 0.18 percent for the quarter, while the system's international stock market investments totaled $1.78 billion after posting an investment return of 0.14 percent for the quarter, Callan Associates reported.
Bond investments saw an investment return of 3.05 percent last quarter, ending with a value of $1.26 billion, according to Callan Associates.
The system's real estate, energy and timber investments totaled $1.19 billion at the end of the quarter after gaining an investment return of 1.47 percent, while the system's "diversified strategies" investments totaled $360 million after an investment return of 1.69 percent, the consulting firm reported. It also reported an additional $31 million in assets, including cash.
During the yearlong period that ended March 31, the system's investment return was minus 1.82 percent, ranking it in the top 69 percent of the nation's public pension systems, Callan Associates reported. The system's five-year return averaged 6.96 percent a year, ranking it in the top 26 percent nationally, the consultant said.
In other business, the trustees decided to conduct a bond investment manager search to diversify the system's bond portfolio. The system will retain New York-based MacKay Shields, which has invested more than $800 million for the system as of March 31, but that amount will be cut in half.
Trustee Bill Gaddy said the system is overloaded with more than $8oo million of its $1.2 billion in bond investments managed by McKay Shields. The other bond manager, Prudential Global, manages more than $400 million of the system's bond investments.
State and local governments paid $262.7 million into the system, and their employees contributed $51.5 million in fiscal 2015, according to the system.
The system includes 45,722 working members with an average salary of $35,979 in fiscal 2015 and 31,530 retired members with an average annual benefit of $13,788 in fiscal 2015, according to system actuary Gabriel, Roeder, Smith & Co.
The system's unfunded liabilities totaled $1.943 billion on June 30 with a projected payoff period of 25 years, the actuary reported. Actuaries often compare unfunded liabilities to a mortgage on a house. Unfunded liabilities are the amount by which the system's liabilities exceed an actuarial value of the system's assets.
Metro on 05/19/2016