From the State Teachers Retirement System Board News
At the August meeting of the State Teachers Retirement Board, Investment Department staff reported that STRS Ohio’s total fund return for the year ending June 30, 2017, was +14.29%. This follows returns of +0.92% in fiscal year 2016 and +5.45% in fiscal 2015. The fiscal 2017 return beat the total fund benchmark by 0.63%. The system’s active management of the funds, rather than relying on index funds, added approximately $400 million in value after all investment costs during the fiscal year. Total fund assets were $75.1 billion as of June 30, 2017.
STRS Ohio’s fiscal 2017 total fund return ranked in the top 20% of Callan Associates’ public fund sponsor database. Callan serves as an investment consultant to the Retirement Board. The strong performance was led by a +22.2% return on international investments (vs. a benchmark return of 21.6%) and a +19.6% return on domestic equities (vs. a benchmark return of 18.5%).
The solid year for investment returns is a positive step for STRS Ohio in a longer journey to strengthen the financial condition of the pension fund. While stock market performance has been solid since the November election, STRS Ohio’s investment consultants continue to call for lower than normal returns over the next decade. At the Retirement Board’s October meeting, actuarial consultant Segal Consulting will present the results of its annual pension valuation report. This report will show the financial impact of the investment return, the cost-of-living reduction and several other factors that affect the retirement system’s funding position. The report is expected to reflect that fiscal 2017 was a favorable financial year for STRS Ohio.
STRS Ohio’s Long-Term Returns:
- 5-year total fund return: 10.06%
- 10-year total fund return: 5.48%
- 20-year total fund return: 7.02%
- 30-year total fund return: 8.39%
- Assumed actuarial rate of return: 7.45%