Another Year in the Books, Another Strong Year for LAGERS Portfolio

Close-up image of an office worker using a touchpad to analyze s

 

As we prepare to present LAGERS’ fiscal year-end portfolio returns at the 3rd Quarter Board Meeting, I thought I’d give our blog readers a sneak peek. I am thrilled to report the portfolio returned 19.0% for the year ending June 30, 2014.

We crushed our assumed rate of return of 7.25% by 11.75%.  Our passive policy benchmark returned 14.7%, which means we outpaced the indexes by 4.3% bringing in over $200 million extra dollars for the year. That’s right, $200 million!

This great one year return feeds into our 5-year return of 15.0%, 10-year return of 8.7% and 20-year return of 9.4%. All exceeding our assumed rate of return.  This translates into downward pressure on employer contributions and a higher funding status (more secure pension), which is a win, win!

What amazes me is that this was achieved after having a return of 14.5% for the fiscal year ending June 30, 2013. I recall having a conversation with the Chairman of LAGERS, Bob Ashcroft, on how we shouldn’t expect to have another high returning year since the last four years had been positive.  Markets tend not to go in one direction for long periods of time, but we ended up 5.5% better than the previous year.

Even though we felt it might be overly optimistic to expect to have another double digit year, we did not change the portfolio’s long-term asset allocation.  We continue to have an asset allocation mix of roughly 50% equities, 25% fixed income and 25% alternatives (e.g., Timber, Commodities, Real Estate, Private Equity).      {Look for another blog posting on asset allocation in near future.}

We rebalanced throughout the year to maintain such allocations and ended the year on target.  This mix of assets was designed to achieve our long-term goal of 7.25% and LAGERS continues to hold a long-term view.  We don’t let the short-term moves in the market alter our long-term design.  I like to say, “You design a house to handle any weather, you don’t design a house based on the current weather outside.”

 

Investment return numbers have not been audited as of this posting.

 

Brian Collett, Chief Investment Officer

Brian Collett, Chief Investment Officer

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One thought on “Another Year in the Books, Another Strong Year for LAGERS Portfolio

  1. […] a steady approach and think about how LAGERS is going to perform,” Rodney said.  “[LAGERS] performance on our investments has been outstanding.  So we were confident between the markets improving, the performance of […]

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