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PSPRS private equity performance honored for second consecutive year


CONTACT: Christian Palmer
PHONE: 602-296-3736
July 22, 2020

PSPRS private equity performance honored for second consecutive year

Industry group: “Stability and financial peace of mind” for plan members

ARIZONA – The private equity investments made by the Arizona Public Safety Personnel Retirement System have once again generated elite annualized returns according to a national industry trade group that studied 176 American public pension plans representing more than 30 million members.

PSPRS private equity investments – which include the buying, improving, and selling of assets like businesses and other venture investments – generated an annualized return of 15.44 percent over the 10-year period between fiscal years 2009 and 2019. The net-of-fee returns ranked PSPRS eighth overall out of 176 pension plans with more than $1 billion in assets, according to the American Investment Council.

“This is the second consecutive year we’ve seen PSPRS rank as an elite performer among public pension systems nationally,” said Drew Maloney, AIC President and CEO. “The system’s high rate of returns for private equity investments helps provide stability and financial peace of mind for Arizona’s 60,000 active and retired first responders, corrections officers, elected officials and judges in PSPRS-managed plans.”

For the 10-year period ending June 30, 2019, PSPRS had approximately 25 percent of its multi-billion dollar trust in private equity investments. The system’s 15.44 percent annualized return for 2019 exceeded AIC’s identified private equity median return of 13.7 percent. Public equity investments like stocks realized a median annualized rate of return of 12.7 percent over the same 10 years, according to the AIC.

The majority of private equity investments held by PSPRS are in funds selected by Chief Investment Officer Mark Steed and Lead Portfolio Manager Shan Chen.

“As we’ve seen over the first half of 2020, public equities like the stock market can be subject to intense volatility – massive downturns and sharp spikes. For a system like PSPRS, private equity investments can bring high returns while helping to safeguard our portfolio from swings in the public markets,” said Steed, who was named CIO in 2018. “We’re gratified by this recognition, but even more importantly we’re gratified by the impact that the system’s private equity success has on our mission to support our members, retirees and the state of Arizona.”

PSPRS Investment Committee Chairman Harry A. Papp called the returns another positive sign that the system is well-positioned to continue its climb back to financial health.

“In a period of extreme volatility for global financial markets, PSPRS members and employers need our system to continue to achieve the best possible returns while doing everything we can to keep risk at acceptable levels,” said Papp, who is also the managing partner of the L. Roy Papp and Associates investment firm. “This type of elite private equity performance shows that PSPRS investors have the skill to evaluate and consistently select the right private market investments from literally thousands of opportunities for the benefit of the entire system.”

The PSPRS trust has grown to approximately $10.6 billion. Each year, the trust provides approximately $1 billion in retirement, disability and survivor benefits to its members and their families.

PSPRS engages in a risk-averse investment strategy to generate returns while protecting Arizona’s public safety employers and taxpayers from market volatility. Please see the PSPRS investment strategy video on YouTube to learn more.