National Conference on Public Employee Retirement Systems

The Voice for Public Pensions

Print Page

Blog

2023 Public Pension Investment Landscape: Key Findings from the BlackRock Peer Risk Study

  • By: admin
  • On: 06/15/2023 18:27:50
  • In: News
  • Comments: 0

During NCPERS June 13th webinar, leaders from BlackRock shared trends across the public pension industry and discussed key findings from their soon-to-be released annual Peer Risk Study.

Earlier this week, NCPERS hosted a webinar where BlackRock's Andrew Citron, CFA, Director; Sarah Siwinski, CFA, Vice President; and Jonathan Cogan, CFA, CAIA, Director shared key findings from their annual Peer Risk Study.

The webinar served as a preview for their upcoming session at the 2023 Public Pension Funding Forum, where they'll further discuss the study following its release. This unique event showcases emerging funding solutions for pensions and delves into case studies that offer a practical perspective on which pension reform initiatives have and haven't worked. At this unique event, professionals from all venues of the pension industry have the opportunity to network in an intimate setting while sharing ideas. View the agenda and register now for early bird pricing.

During the June 13th webinar, panelists shared insights into the current public pension investment landscape, including:

  • Since the turn of the century public plans' funded ratios have rapidly declined from almost fully funded in 2000, to mid-70s in recent years.

  • Assumed returns have also trended lower from about 8% to less than 7% in the same time period, thereby increasing liability values and further underscoring the challenging environment for public plans.

  • Over time we've seen a clear trend towards alternative asset classes to help boost portfolio returns. Since 2008 we saw public fixed income allocations and public equity allocations fall by 4% and 7% respectively, with alternatives increasing by 11%.

    • Within alternatives, real assets, private equity and hedge funds all increased by over 3% since 2008, with private credit allocations increasing in more recent years.

  • Based on our Q1 Capital Market Assumptions and our peer study of over 125 plans we estimate that most plans will exceed their assumed return expectation over the next 10 years.

  • We find that most public pensions tend to have large risk asset allocations, resulting in risk factors concentrated in economic growth, which drives over three quarters of portfolio risk on average.

If you missed the presentation, be sure to watch the webinar recording or register for the Public Pension Funding Forum to hear even more leading public pension research.

If you have questions for the panelists, please contact communications@ncpers.org.

Comments

There have been no comments made on this article. Why not be the first and add your own comment using the form below.

Leave a comment

Please complete the form below to submit a comment on this article. A valid email address is required to submit a comment though it will not be displayed on the site.

HTML has been disabled but if you wish to add any hyperlinks or text formatting you can use any of the following codes: [B]bold text[/B], [I]italic text[/I], [U]underlined text[/U], [S]strike through text[/S], [URL]http://www.yourlink.com[/URL], [URL=http//www.yourlink.com]your text[/URL]

Contributors