Capital markets report strong third quarter performance with US equities and bonds rising

Portsmouth's Supplemental Retirement Board reported strong capital market performance during the third quarter of 2024, with significant gains in both equity and bond markets. The S&P 500 saw an impressive rise of approximately 6%, contributing to a year-to-date increase of 22%. This marks a continuation of robust market trends, following a 20% return in the previous year, highlighting an unusual but positive trend of consecutive years with such high returns.

The Russell 2000 index also performed well, increasing by 9% in the third quarter, although it remains up only 11% for the year. The driving force behind these gains has been attributed to major companies, particularly those involved in generative AI, often referred to as the "magnificent seven." Non-U.S. stocks also showed strength, with emerging markets rising nearly 9% and developed markets outside the U.S. increasing by over 7%.

Despite a slight pullback in October, U.S. equity markets have remained positive, while bond markets experienced a modest increase of about 5% for the year. The board noted a slight overweight in stocks compared to their target allocation, reflecting a natural drift in the portfolio rather than a strategic decision.

In terms of performance relative to other public retirement systems, the board reported a quarterly return of 5.35%, which aligns closely with the median returns of similar funds. Over the past year, the board achieved a return of 12.3%, surpassing the assumed return of 7.25% and placing it near the top quartile of public retirement systems.

The board emphasized its commitment to maintaining strong returns and aligning with the performance of peer institutions, indicating a focus on strategic investment decisions moving forward. As the year progresses, the board will continue to monitor market conditions and adjust its strategies accordingly to ensure the sustainability of retirement benefits for public employees.