N.C. Pension Fund Reports Small Annual Gain

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BRADENTON, Fla. — North Carolina's $87.6 billion state pension fund reported a gain of 1.77% in the second quarter, state Treasurer Janet Cowell said Thursday.

The North Carolina Retirement Systems gained 0.8% over the last 12 months, net of fees and expenses.

The fund returned an average annual gain of 5.98% over the last five years and 8.53% over the last seven years, she said.

"The low-interest-rate market environment will likely continue to keep investment returns relatively low over the next few years," Cowell said. "However, the General Assembly's conservative funding policy and our office's long-term diversified investment strategy should keep us one of the most solid pensions in the nation."

North Carolina's actuaries recently estimated that the Teachers and State Employees' Retirement System is 95.6% funded. Cowell said that it is one of the highest funded ratios in the country.

Over the past five years, the department's investment policy developed in consultation with the Investment Advisory Committee has helped the state pension fund outperform most large public pension funds, with lower risk and cost, she said.

During the 2016 fiscal year, the pension fund reported that stocks, which account for 42.5% percent of investments, fell 3.89%.

The strongest performers were investment-grade fixed income bonds, which increased 7.25%. Non-core real estate also increased, by 12.39%, in addition to private equity, by 4.32% and core real estate, by 8.53%.

Cowell said returns outside of public equity provided diversification and were in line with the investment policy.

The North Carolina retirement system is the 10th-largest public pension fund in the country.

It provides retirement benefits to more than 900,000 teachers, state employees, firefighters, police officers and other public workers.

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