A lecture from the schoolmarm

Colorado PERA’s house organ, “PERA on the Issues,” took this blog to task recently, without mentioning us by name, for comparing apples to oranges when looking at recent state pension fund returns.

One of PERA’s points is valid: we looked at its 2016 calendar year returns and compared them to median returns for funds with a fiscal year ending June 30. Given the substantial market run-up that has occurred since the 2016 election, you’d expect a July 1-June 30 year to look stronger than January 1 to December 31.

So the fact that PERA returned 7.3 percent compared to the funds ending June 30 median of 12.4 percent is not surprising. Nor does it necessarily reflect badly on PERA’s investment decisions. This is an important clarification to make, and we thank PERA for pointing it out, despite the schoolmarmish tone of the post.

PERA’s other point in its post sounds strangely defensive. Our post pointed out that PERA’s biggest asset allocation went to global equity, and its global equity return last year — according to its own data — lagged its own benchmark by a full percentage point: 7.4 percent vs. 8.4 percent. Huffed PERA on the Issues’ author:

“In years when the global equity market is up, those investment programs with a large stake in that asset class might show a stronger performance. As a long-term investor, PERA has the responsibility to look at the long-term and not try to time the market.”

No one here suggested otherwise. We just thought it worthwhile to point out the numbers. Some public sector pension funds around the county have been the target of criticism for making increasingly risky investments in a “baby needs new shoes” attempt to make up for big shortfalls. PERA appears to be a more cautious investor than some other funds.

We’re glad the good folks over at Colorado PERA are reading us, and we always appreciate feedback.

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