PSPRS Investment Strategy
With a current value of $10.3 billion, the PSPRS portfolio is designed to produce solid investment returns while reducing the risk of losing money to the greatest extent possible.
After years of double-digit investment returns, the so-called “Dot com” crash of 2001-2002 devastated private and public investors alike. For PSPRS, which held a stock-heavy portfolio designed to “hit home runs,” the losses tallied up to a shocking $1 billion. With 21 percent of the portfolio gone in almost an instant, the need to seek more diversified investments became urgent. Implementing the change would first require approval from the state Legislature, as state law largely limited the PSPRS to publicly-traded domestic stocks and fixed-income (bonds) investments. After several years of lobbying, lawmakers in 2008 amended statute to allow the PSPRS and its outside managers to invest in a much broader assortment of opportunities all over the world.
Today, that volatile stock-and-bonds portfolio is long gone. In its place is not only a portfolio with investments in 11 asset classes, but a portfolio that is 56 percent less volatile than the Standard & Poor (S & P) 500 Index. If an economic catastrophe like the Dot Com crash were to happen today, the PSPRS losses would be limited to an estimated 3 percent of the total value of the portfolio. More information about the portfolio is found in this portfolio analysis.
With the retirement of more than 59,000 members at stake, PSPRS seeks consistent returns through not only stocks, but diverse and responsible investments in emerging technologies, consumer goods, real estate holdings, energy markets and even agriculture. Our stategy won’t produce the highest returns in bull markets, but it will survive and can be counted on for generations of public safety employees who protect and govern our state.
Our strategy has earned attention and respect of national experts and financial publications alike and, not surprisingly, it has prompted other public pension funds to reassess their own investment risk that can threaten their bottom line and beneficiaries. With the most diversified public pension portfolio in the nation, PSPRS has received the following honors:
- Portfolio managers Shan Chen and William Thatcher named among "Top 30 Public Pension Institutional Investors" of 2018 by Trusted Insight magazine.
- Awarded “Allocator of the Year” in 2017 by Institutional Investor magazine
- CIO Ryan Parham named among 2016, 2017 “Top 30 Public Pension Chief Investment Officers” by Trusted Insight magazine
- Finalist nominee for 2016 “Small Public Pension Plan” of the Year by Institutional Investor magazine
- CIO Ryan Parham nominated 2016 “CIO of the Year” by Institutional Investor magazine