December 6, 2022
Public Safety Personnel Retirement System
State of Arizona
FOR IMMEDIATE RELEASE
Contact: Christian Palmer
Investment returns fall while trust grows to $17.8 billion
Volatile markets produce -4% net-of-fee return for fiscal year 2022
ARIZONA – A year after generating record investment returns, the PSPRS trust limited its net of fee losses to 4 percent amid national and global economic disruptions for the fiscal year ending June 30, 2022.
The PSPRS investment portfolio is designed to limit losses during market fluctuations in order to protect plan employers and members. The overall value of trust assets grew to $17.7 billion from $15.7 billion of assets under management the year prior. The growth was largely due to additional contributions made by employers to pay down unfunded pension obligations.
“The PSPRS portfolio performed far better than the major stock and bond indices and the agency’s investment team avoided investment commitments in markets that they rightly predicted would fall in value,” said Trustee Harry Papp, chairman of the PSPRS Investment Committee. “We’re satisfied that the trust performed as designed and look forward to more cooperative markets.”
While both domestic and international stock markets fell double digits during the 2022 fiscal year, PSPRS-managed assets were largely shielded due to low exposure to stock market index funds and large holdings in cash. Plan investments in private equity, venture capital, real estate, real assets and private credit significantly outperformed benchmarks and limited further reductions in trust assets.
“Our diversification into private markets helped the trust handle the volatility caused by inflation and corresponding federal interest rate hikes, supply chain disruptions and other international affairs,” said PSPRS Chief Investment Officer Mark Steed. “We’re still well-positioned for additional volatility and taking advantage of opportunities that strengthen the long-term sustainability of the pension trust.”
PSPRS generated more than $3.1 billion in annual investment returns for fiscal year 2021, a 27.8 percent net-of-fee return that marks a new record for the state pension system serving nearly 60,000 firefighters, police officers, corrections officers, elected officials and judges.