State Pension Fund Reports 6.38% Earnings for 2nd Quarter 2020

Currently Above February 2020 Highs with Estimated Valuations Exceeding $107 Billion for the First Time in N.C. History

State Treasurer Dale R. Folwell, CPA, reported today to the Investment Advisory Committee (IAC) that the state pension fund (the Fund), comprised of the retirement plans the N.C. Department of State Treasurer manages, had gains of 6.38% for the 2nd quarter. Pension fund assets were valued at $103.9 billion on June 30, 2020, an increase of $5.6 billion from $98.3 billion at the end of the 1st quarter of 2020.

Additionally, fund levels as of Aug. 14, 2020, are $107.3 billion, exceeding the Fund’s 2020 high of $106.9 billion in February prior to the COVID-19 economic shutdown. These figures, and all of the following performance figures, are reported net of all fees and expenses including paying $1.5 billion in gross benefits during the three-month period.

“A 6.38% return during one of the most volatile markets I’ve ever seen is a testament to the great work done here by our investment management team,” said Treasurer Folwell. “We’ve maintained the conservative investment strategies of previous state treasurers, allowing us to minimize losses during the down market, and to also see substantial gains when the market rebounded. We don’t have a crystal ball and we don’t gamble with the money of those who teach, protect and otherwise serve the people of North Carolina.”

An update on the Internal Passive Equity Funds performance was also given during the IAC meeting, with passive assets under management topping $11.6 billion. Second-quarter returns of 20.84% performed in line with the fund’s benchmark of the Russell 200 index, and 24.71% in returns performed in line with the Russell Mid Cap index strategy. Treasurer Folwell and the public equity team announced the first-ever Department of State Treasurer internally managed passive index fund in November 2017. The fund was created as a means of reducing fees paid to outside investment managers while maintaining performance.

The North Carolina Pension Systems is widely regarded as one of the best funded in the nation. In fact, Moody’s Investors Service recently reported that North Carolina’s Retirement Systems, which includes state and local employees, is the best funded in the nation when looking at its Adjusted Net Pension Liability.

Additionally, a recent “stress test” by The Pew Charitable Trusts concluded that North Carolina’s state pension fund is well-positioned to maintain solvency during tough economic times.

“Both my administration and those before us have conservatively managed the pension plans for decades,” said Treasurer Folwell. “We continue to focus on cutting costs to maximize the value we get from our investments. We cannot let Wall Street drag the plan into risky and dangerous investment schemes that increase fees and jeopardize the solvency of a plan that exists to benefit those that teach, protect and serve.”

The North Carolina Retirement Systems is the ninth-largest public pension fund in the country and is currently valued at more than $107 billion. It provides retirement benefits and savings for more than 950,000 North Carolinians, including teachers, state employees, local governments, firefighters, police officers and other public workers.

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