PERS portfolio roughly flat fiscal year to date amid April volatility; staff urges sticking to long‑term allocation

The Public Employees Retirement System of Mississippi’s (PERS) investment staff and consultant Callan told the system’s Investment Committee on May 20 that the total fund was up about 1% fiscal year to date as of the close the prior day but had suffered an April decline of a little over 3%. The committee heard that the fund’s diversified allocations have limited losses relative to some U.S. benchmarks and that payment flows and rebalancing decisions affected the quarter’s net market value.

The presentations matter because PERS must balance near‑term market swings against its long‑term liability schedule; trustees were asked to keep perspective on volatility while staff continues to follow the system’s strategic allocation and rebalancing policy.

Staff opened the discussion by noting the portfolio’s estimated fiscal‑year performance and by urging trustees not to “lose perspective” amid change and volatility. Callan’s representative, John Jackson, reviewed quarter‑end data showing total fund assets of about $33.9 billion as of March. That quarter included an investment return that increased the fund’s value by roughly $181 million and benefit and other payments of about $191 million, producing a net decrease of approximately $10 million from the prior quarter’s market value after liabilities were paid.

Jackson walked trustees through short‑term and longer‑term returns by asset class. For the quarter, U.S. domestic equity (large/mid/small cap) declined about 4.6%, global equity was down roughly 1.6%, international (ex‑U.S.) equities gained about 5.6%, fixed income rose about 2.3%, private equity and private credit posted modest positive returns, and cash and certain other liquid holdings added value. Jackson and staff emphasized that diversification produced net positive returns over longer horizons (five‑ and ten‑year annualized returns exceeded actuarial assumptions), even though calendar‑year or intra‑month performance could be negative.

Staff also described operational mechanics: when the plan pays benefits (about $191 million in the quarter), staff draws cash from liquid pools and rebalances by taking proceeds from overweight asset classes and moving them to meet liabilities rather than engaging in frequent market timing. Trustees asked whether the quarterly market drawdown caused “heartburn”; Callan said no—past downturns (2018, 2022, COVID) showed the fund generally outperformed its benchmarks in declines because of its diversification and active management.

Presenters discussed macro drivers that have influenced markets, including trade‑policy uncertainty and the potential short‑term inflationary effect of tariffs. Callan said potential tariff actions increase uncertainty and could raise near‑term inflation, slow growth and produce volatility in the short term, but emphasized the fund’s allocation is built to deliver strong long‑term returns across outcomes. Trustees pressed staff on quick metrics for estimating daily changes in the fund; staff said they produce daily intra‑month estimates but that a simple, “quick and dirty” conversion from a single index move to the plan’s percentage change is unreliable because the plan’s exposures are diversified across multiple asset classes and geographies.

Trustees were also shown valuation and factor charts illustrating that U.S. large‑cap equities had been at the “upper end” of historic valuation ranges and that non‑U.S. developed and emerging markets had been performing more favorably in the quarter. Callan pointed to the recent weakening of the U.S. dollar, which boosted U.S. dollar returns from non‑U.S. assets when translated back into dollars.

The discussion closed with staff and Callan reiterating the long‑term, strategic posture: stay disciplined to the board’s policy targets, rebalance thoughtfully, use liquid assets to meet benefit payments, and avoid short‑term market timing.

Ending: Staff told the committee they will continue to monitor markets and report back at regular investment committee meetings; trustees instructed staff to remain focused on policy allocation and rebalancing while tracking near‑term drivers and reporting material developments to the board.