Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Investment Performance topic
No spam. Unsubscribe anytime.
Segal reports strong one-year returns for Providence pension and trusts; hedge-fund sleeve noted as drag
Summary
Segal told the Board that the total plan returned 1.3% for the quarter and 13.6% for the year; trusts rose 1.9% in February and about 19% for the trailing 12 months. Segal flagged cash drag and hedge-fund underperformance as the main sources of recent underperformance.
Segal told the City of Providence Board of Investment Commissioners on March 26 that the pension plan posted a 1.3% return for the fourth-quarter snapshot and a 13.6% return for the one-year period (net of fees), and that trust funds produced roughly 1.9% for February and about 19% for the trailing 12 months.
"We had a 1.3% return for that quarter, and we had a 13.6% return for the 1 year," a Segal advisor reported, noting that the pension's long-term objective is broadly in the 6.8%--7.5% range. The adviser said the plan's three- and five-year returns place it above about 90% of public defined-benefit peers on those shorter multi-year measures, though the one-year peer ranking was near median.
Segal identified two primary drivers of recent underperformance: a cash drag earlier in the trailing year when cash holdings were sometimes 8%--10% of the portfolio (cash has since been reduced to under 1%), and the hedge-fund sleeve's underperformance over the trailing period. The report singled out Renaissance Institutional Equities as a hedge-fund sleeve manager that produced a strong one-month return (about 5.1%), but Segal said composite hedge-fund results were a source of lag over the longer horizon.
Segal also discussed individual manager performance: Robeco (Boston Partners Mid Cap Value) outperformed many mid-cap value peers across multiple horizons, Boston Partners Small Cap Value underperformed the Russell 2000 Value Index by about 4%--5% in the latest year but remained at or above median on longer horizons, and Loomis Sayles (the plan's active fixed-income manager) outperformed peers on measures including up-capture and down-capture.
The board voted to accept the investment performance report and to approve the trust funds report by voice votes. Segal said there were no immediate recommendations beyond a routine rebalancing recommendation that was considered in a later item.
The board adjourned after approving the items on the agenda.
