State Treasurer Dale Folwell said Thursday the state pension fund grew over the second quarter of the year as its exposure to risk shrank.
Pension fund assets were valued at a record $93.9 billion after all fees and expenses. That is up from $92.2 billion at the end of the first quarter.
A report of all asset classes accompanied Folwell’s press release, in which he said the retirement systems his department manages gained 2.7 percent for the quarter ending June 30.
Despite gains in several areas, Folwell warned he is “cautious about returns going forward.”
The preliminary report indicates the Fund earned 10.6 percent for the fiscal year ending June 30. Public equity (stocks), making up almost 40 percent of the total fund, grew 19 percent. Private equity rose 9.5 percent. Non-Core Real Estate, and Opportunistic Fixed Income returned 10.8 percent and 10.9 percent, respectively.
The Multi-Strategy portfolio rose 12.9 percent for the 12-month period. Inflation-Sensitive and Core Real Estate investments increased by 11.1 percent and 8.2 percent respectively. Investment-Grade Fixed Income returned a loss of 0.3 percent for the same period.
“In this low interest rate environment, we are pleased our funds did so well, while at the same time, the pension fund as a whole had less exposure to risk,” Folwell said.
During the last fiscal year-end report, fees paid to Wall Street investment managers exceeded $600 million, while investment gains were only 0.8 percent. To date, more than $60 million in fees have been cut. Folwell has renegotiated contracts across the divisions of the Department of State Treasurer that have saved taxpayers tens of millions of dollars.
Last week, Folwell said he hoped he could get good interest rates on a pending bond sale.
Goldman Sachs bought the bonds — valued at $618 million — at an interest rate of 2.27 percent, saving North Carolina taxpayers $83.55 million in debt service. Folwell said the interest rate was lower than anticipated.
In another refinancing deal, Citigroup Global Markets Inc. bought $106 million of general obligation refunding bonds at an interest rate of 1.39 percent. That deal saved taxpayers $15 million in debt service.
Saving nearly $100 million in the deals frees up money “for roads, classrooms, and law enforcement, those core functions that people expect from government,” Folwell said.