Third Quarter Assets Decline—A Snapshot in Time

Driven largely by the decreases in corporate stocks and interna­tional securities, the U.S. Census reports that the value of investments held by 100 of the largest U.S. public-employee retirement systems fell in the third quarter of 2011. Total holdings and investments quarter-to-quarter decreased $236.6 billion, or 8.5 percent, to $2.5 trillion.

This news is no surprise to anyone who has even half-listened to the daily, or weekly, gyrations of the stock market. However, performance in one quarter—especially following a trend of increases for five consecutive quarters—is not as worrisome as some may think.

Public Pension Investment Returns and Market Volatility

For fiscal year ending June 30, 2011, state and local government retirement systems had a median investment return of 21.6 percent.

That statement is often followed by “but…” as in “but look what’s happened to the markets since then!” 

With a slow economic recovery and ongoing global market volatility, the fact remains that taking a long-term focus is an overarching factor in public pension investment strategies and projections.

A Picture Paints a Thousand Alternative Views

Numbers don’t lie.  But how numbers are displayed can significantly shape impressions.