New York state pension ends fiscal year with record assets

WASHINGTON Mon May 12, 2014 2:32pm EDT

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WASHINGTON (Reuters) - New York state's pension fund reached its highest value on record of $176.2 billion at the end of its fiscal year in March as the rate of return on its investments jumped to 13.02 percent, the state comptroller said on Monday.

The public pension fund, the third largest in the country, ended the previous fiscal year with $160.4 billion in assets after its investments returned 10.4 percent.

Investment earnings provide the bulk of public pensions' revenues and last year's rising stock market offered much-needed respite for retirement systems that were hurt by both the financial crisis and states' budget crunches. Public pensions ended 2013 with $3.192 trillion in cash and security holdings, the highest level since 1968, according to the U.S. Census.

The performance of the New York State Common Retirement Fund's assets mirrored the wider market from April 1, 2013 through March 31, 2014. The New York fund's rate of return was nearly double its long-term expected rate of 7.5 percent and the highest since fiscal 2011.

Domestic equities, which make up 37.7 percent of the fund, had returns of 22.3 percent and foreign stocks, representing 13.1 percent of the portfolio, had returns of 13.1 percent. Global equities, an asset class made up of both domestic and foreign stocks which is only a sliver of the allocations, returned 25.1 percent.

The fund's fixed-income investments, 21.4 percent of its total portfolio, had losses of 0.2 percent. Its Treasury Inflation-Protected Securities, representing 5.8 percent of the portfolio, had losses of 6.2 percent.

In recent years, many pensions have branched out into riskier investments in the hope of higher earnings.

The New York retirement fund's "absolute return strategies," or hedge funds, now make up 3.2 percent of its investments and had returns of 9.9 percent last fiscal year. "Opportunistic Alternatives," or investments that offer high risk-adjusted returns, only constitute 0.3 percent of its portfolio and had returns of 7.8 percent.

(Reporting by Lisa Lambert; editing by; Andrew Hay)

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