The Ohio Public Employees Retirement System earned 13.9 percent on its investments last year, boosting its overall portfolio to a record $88.6 billion, surpassing the $83.6 billion reached in 2007.
The return achieved in 2013 is among the top 10 annual investment returns in OPERS’ history.
The unaudited results indicate that OPERS’ Defined Benefit Fund returned 14.38 percent, and the Health Care Fund increased 11.37 percent, each beating projected benchmarks. The results are net of fees.
The $74.7 billion Defined Benefit Fund returns were led by equities, which account for 43.5 percent of the portfolio. Fund highlights:
- U.S. equities increased 33.72 percent to $15.9 billion.
- Non-U.S. equities returned 15.27 percent, finishing the year at $16.6 billion.
- The three main alternatives investments had positive returns. Private equity returned 16.3 percent, real estate increased 15.2 percent, and hedge funds gained 9.1 percent.
- Core fixed income investments, which make up less than 9 percent of the defined benefit portfolio, declined 1 percent, with other debt instruments showing mixed results.
The OPERS Health Care Fund, which totals $13 billion, had a similar pattern of performance. The Defined Contribution Fund ended the year at $885 million.
“The strong performance of our investments in 2013 illustrates the professional, prudent manner in which the OPERS pension and health-care portfolios are managed,” said OPERS Executive Director Karen Carraher. “One of our goals is to earn an average return of 8 percent over the long term. These strong returns surpass that goal, and allow us to continue to be well-funded.”
Carraher said last year’s investment performance, coupled with changes in pension law passed by the Ohio General Assembly and changes OPERS made in its health care program, combined to improve OPERS’ overall fiscal strength.
The funding level of the defined benefit plan compares its assets to its liabilities. Funded levels of 80 percent or higher are considered healthy. As of Dec. 31, OPERS’ funding ratio was 81 percent.
Two-thirds of OPERS’ annual income is derived from its investments. We count on these returns, achieved by a professional staff with decades of experience, to pay benefits and help maintain meaningful health care coverage for members. Our staff manages about $35 billion in OPERS funds.
“OPERS invests for the long-term,” said OPERS Chief Investment Officer John Lane. “This investment strategy allows the fund to weather market highs and lows by maintaining a disciplined approach and a diversified portfolio spread over several asset classes. This disciplined approach allows us to prepare for the future retirement of our members, and supports our existing retirees.”
OPERS also supports many businesses within the state. Since 2010, we’ve committed more than $2.4 billion to Ohio investments or Ohio-based money managers. Ohio-qualified managers not headquartered here oversee more than $6.4 billion of our assets.