Public Pension Fund reports 15.2% annual return despite challenges from technology stocks

The Supplemental Retirement Board Meeting held on February 1, 2024, in Portsmouth, Virginia, focused on key financial discussions regarding the performance of the retirement fund and broader economic trends affecting investments.

During the meeting, board members analyzed the implications of aging demographics and technological advancements on inflation and market performance. It was noted that while healthcare demand may rise due to an aging population, other sectors could experience disinflationary pressures. The potential impact of artificial intelligence on long-term disinflation was also highlighted, suggesting that while inflation may remain elevated in the near term, it could stabilize over the next decade.

The meeting also reviewed the fund's performance, revealing a 9.5% return in the fourth quarter of 2023, slightly outperforming the benchmark of 9.4%. However, the overall annual return for 2023 was reported at 15.2%, which fell short of the benchmark. This underperformance was attributed to the fund's underweight position in major technology stocks that significantly influenced market returns.

Despite this, the board expressed optimism, indicating that the fund's performance would likely rank in the top quartile among public retirement systems nationwide. The discussion included the acknowledgment of delays in reporting returns from alternative investments, particularly in real estate, which may have distorted the current performance figures.

In conclusion, the board remains hopeful for continued positive returns in the upcoming plan year, aiming to exceed actuarial return assumptions. The meeting underscored the complexities of managing retirement funds amid evolving economic conditions and market dynamics.