Oregon Pension Fund Earned 2.1 Percent Returns in 2015, Outperforming Most Peers & S&P 500

Oregon Investment Council has been diversifying fund to perform better in cyclical market downturns.

The Oregon Public Employees Retirement Fund (OPERF) earned returns of 2.1 percent in 2015, which exceeded the performance of the S&P 500 and ranked highly among peer institutional investment funds.

The fund ended the year with a balance of $68.7 billion.

The Oregon fund performance ranked in the 89th percentile for returns, meaning it exceeded 88 percent of its peers with assets under management of $10 billion or more, according to Callan Associates, the general consultant for the Oregon Investment Council.

The pension fund is a global, diversified trust fund invested and managed on behalf of almost 339,000 current and future public sector retirees. The 2.11 percent yield exceeded the policy benchmark for OPERF, which was 1.57 percent.

The performance of overall domestic and international markets was lackluster in 2015. For example, the S&P 500 index – which is composed entirely of public stocks — lost 0.73 percent.

The State Treasury, with the direction of the Oregon Investment Council, has been deliberately revising the diversification of the pension fund in recent years to perform better in cyclical market downturns, a decision made after the global economic crisis in 2008 and 2009. The revamped portfolio now targets a larger percentage of alternative investments that are less likely to track the performance of stocks, real estate and bonds.

In addition, Treasury has worked with legislators to facilitate new monitoring and staffing changes to better manage risk across the state-managed portfolio. The agency also has proposed governance and fee reduction strategies.

“Oregon invests for the long term, in up and down markets, and Oregonians are better off because of the due diligence of treasury to better manage risk and diversify for down cycles,” said State Treasurer Ted Wheeler.

With the 2015 results included, the fund has returned an average annual performance of 6.27 percent for the past decade. That puts Oregon in the 84th percentile, compared to peer funds for the same period, according to Callan. The long-term performance of the fund matters: Roughly 70 cents of every dollar in pension benefits comes from investment returns.

The Oregon State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. State investment policies are set by the Oregon Investment Council. The State Treasury also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices. You can follow Oregon Treasury news on Twitter at @OregonTreasury.