Rhode Island's pension fund earned more than $530 million in investment gains in 2016, the most in three years, General Treasurer Seth Magaziner told members of the State Investment Commission at their monthly meeting.
The state's 7.4% net return beat its internal benchmark of 6.3% and a traditional 60% stock, 40% bond portfolio which would have returned 5.9% last year, according to Magaziner.
"While this is encouraging and will help keep us on track to reach a healthy funding level on time, I look forward to stronger performance once our new Back to Basics strategy is fully implemented," Magaziner said in a statement.
The commission last year approved Magaziner's Back to Basics investment strategy, designed to strengthen performance and reduce risk. Among the changes is an exit from most of the pension system's hedge-fund investments. Equity hedge funds were the only part of the pension portfolio to post a negative return for the year.
Among the strongest performing asset classes in 2016 were infrastructure, which earned an 18% return; real estate, which earned 9.8%; and private equity, which returned 9.2%, according to Magaziner.
All performance is reported net of fees and expenses.
Moody's Investors Service rates Rhode Island's general obligation bonds Aa2. Standard & Poor's and Fitch Ratings assign AA. All three have stable outlooks.
