Mass. pension beats stock market, most public funds

Treasurer credits diversification plan for fiscal year results

The Massachusetts state pension fund racked up a 13.4 percent return in the latest fiscal year, ranking it once again as one of the nation’s top-performing public investment portfolios.

The $36 billion state fund’s return was significantly better than the US stock market. The Standard & Poor’s 500 index only gained 7.4 percent in the 12-month period that ended June 30. The results put Massachusetts in the top 5 percent of large public pension funds for the period, and over 10 years it ranks in the top 1 percent.

Most significantly, the results easily exceeded the 8.25 percent target the fund must reach annually to pay benefits to 278,000 current and retired public employees.

But Massachusetts’ results were fueled by the kinds of investments many retail investors shy away from, purchase only in modest amounts, or cannot buy because they lack the money and clout of a large institutional investor. Those investments included stocks of companies in emerging overseas economies, which gained 37.4 percent; real estate, with a 30.8 percent gain; and alternative investments, such as venture capital start-ups, which produced a 26.3 percent return.

Meanwhile, the pension agency is increasing its investments in real estate, to 8.1 percent from 5.6 percent, and in timber holdings, to 3.6 percent from 2.9 percent.

For the complete story go to http://www.boston.com/business/articles/2005/08/04/mass_pension_beats_stock_market_most_public_funds/.