Real Estate, Private Equity Propel Washington State Investment Board to Strong Fiscal Year

By David G. Barry  

If public pension fund officials are looking for the formula to generate strong returns, they may want to head to the Pacific Northwest.

Earlier this year, the Oregon Public Employees Retirement Fund (OPERF) said it generated a 6.32% return for the fiscal year ended June 30. And now, the Washington State Investment Board (WSIB) said its commingled trust fund of defined benefit plan assets produced a 5.4% return for the fiscal year. Those are the best results by public pension funds for that period – so far. In fact, they are only two of a dozen or so that managed to report positive results.

The commingled trust fund accounts for $150 billion of the $182 billion that WSIB manages in total. It blew past its benchmark of negative 0.8%. During the fiscal year ended June 30, 2021, it had a return of 28.7%.

Like many of the other pension funds that reported positive results, WSIB's fund benefitted from its strong exposure to private markets.

Real estate, which accounts for 21% of the fund, produced a 40.8% return for the year. Private equity, which had the largest allocation at 29.3%, generated a 20% return. Tangible assets, meanwhile, had a 11% return. It has a 6% allocation to the segment.

Public equities, meanwhile, posted a 16% loss. It accounts for 24.6% of the fund.

Two individuals can take credit for overseeing the result. Allyson Tucker started the fiscal year as chief investment officer but became WSIB’s chief executive officer in January. Christopher Hanak was promoted in February to fill the CIO role. He had joined WSIB in 2019.

Other public pension funds that have produced positive results for the 2021-22 fiscal year include the Pennsylvania Public School Employees’ Retirement System (PSERS), New Mexico Educational Retirement Board (ERB), Los Angeles County Employees’ Retirement Association (LACERA), the Virginia Retirement System (VRS), the Maine Public Employee Retirement System (MainePERS), Employees’ Retirement System of the State of Hawaii (HIERS), the Arizona State Retirement System (ASRS) and the Houston Firefighters’ Relief Retirement Fund (HFRRF).