2008 Was A Bad Year In The Markets

PERAC has released the 2008 results for the state and local pension funds. And the results are ugly — losses of close to 30% in many cases.

It is only fair to note that PRIM (the state pension fund) lost 29.5% in 2008, while the 55 systems that invested on their own lost significantly less, with a median loss of 26.3%. Pioneer (and the Patrick Administration) have advocated for some time that smaller local pension funds should be incorporated into the state fund. See
Pioneer’s white paper on local pension funds

This position, using only 2008 data, would have cost money for those local funds. It is largely a function of asset allocation — PRIM has much greater exposure to international and emerging markets equity, two asset classes that got hammered last year.

I would urge you to contemplate the longer term return figures before jumping to any conclusion. Even with a dismal 2008, almost no fund beats PRIM by any significant amount over the 5, 10, and lifetime horizons. (N.B. There are number of funds clustered right above PRIM’s various return amounts. Most of these are fully invested in PRIM and are getting some slightly enhanced return due to cash positions or a long-forgotten incentive payment.)