Big Bets, Poor Payoffs

PSERS has put a bigger share of its money into “alternative” investments than any other public pension fund.

Such investments – hedge fund start-ups, private-equity buyouts – make up more than half its $67 billon portfolio. Other retirement plans invest more heavily in conventional stocks and bonds.

The Pennsylvania fund’s profit rate in recent years has trailed the Standard & Poor’s 500 U.S. stock index. PSERS has put billions into such high-fee Wall Street financial products as “risk parity” funds and special energy partnerships. The retirement plan also keeps a separate index for such investments in general, as a way to track its particular funds.

In both cases, the PSERS investments have generally lagged behind its index.

Returns ending as of June 30, 2020
Table: Staff Graphic Source: PSERS documents