June 13, 2016 / 8:30 PM / 3 years ago

New York state's pension fund posts lowest return since 2009

June 13 (Reuters) - New York state’s employees’ retirement fund earned a return on investment of just 0.19 percent in fiscal 2016, it said on Monday, its worst showing since the U.S. recession ended in 2009 and a worrying indicator for other funds.

The New York State Common Retirement Fund, the nation’s third-largest public pension fund, said its non-U.S. equities lost 8.54 percent compared with the prior year, while domestic equity investments fell 0.54 percent over same time period.

Both trends were consistent with the declines in U.S. and global equity markets, the fund said.

The fund’s value also dropped for the first time in seven years to $178.1 billion as it paid out $10.9 billion in benefits during the fiscal year ended March 31. The fund was valued at more than $180 billion at the end of fiscal 2015.

New York State Comptroller Thomas DiNapoli said that despite weak equity markets, the fund’s diversified portfolio and investment team delivered a positive return.

“We continue to have confidence in our asset allocation for the long term,” DiNapoli said. “Our investment team is focused on ensuring we remain one of the best funded and top performing plans in the country.”

The losses in equity investments for fiscal 2016 were offset by gains in investments in fixed-income, private equity, opportunistic alternatives and real estate.

The fund, which provides retirement security for more than 1 million active state and local government employees, retirees and their beneficiaries, has a long-term expected rate of return of 7 percent.

Weak stock market returns are threatening the other large public pensions funds as well.

The nation’s largest public pension fund, the California Public Employees’ Retirement System, on Monday forecast flat returns for its current fiscal year, ending June 30.

Calpers’ chief investment officer, Ted Eliopoulos, said returns would “likely to be flat, which is a nice way of saying zero.” (Reporting by Rory Carroll in San Francisco; Editing by Leslie Adler)

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