Teachers may be leaving the profession in record numbers this year after traveling on duty on the frontlines of the pandemic, but even in retirement there isn’t much sanctuary, safety or security.
On Tuesday, data released by the Wilshire Trust Universe Comparison Service showed state and local pension funds for teachers, firefighters and police officers are not earning passing grades for their performance amid a market downturn this year. And their colleagues from the university foundation certainly do not set a higher evaluation curve.
Wilshire’s senior vice president couldn’t have been clearer on Tuesday: “It’s been a really bad quarter for investing, there’s no getting away from it.” In the 12 months ended June, the S&P 500 fell 12%, bringing the stock market down massive public funds were lost. University endowments lost an average of 10% in the same year, while public pension funds lost an average of about 8%.
For both groups, the latest figures mark their worst annual returns since 2009 and a catastrophic reversal in 2021, which brought an average return of around 27% for the cohort. For both types of investment funds, however, what matters most is size – and the diversification that goes with it:
- The California Public Employees Retirement System, the nation’s largest pension fund, returned -6%, while the California State Teachers Retirement System, the nation’s second-largest pension fund, returned -1.3%.
- While universities typically don’t announce individual results until the fall, Wilshire reports that endowments with more than $500 million in assets saw a slight decline. edge About 1% over a 12 month period.
food fight: To cover expenses, both types of funds target an aggressive annual return of around 7%. With an average equity allocation of 57% as of June 30, pension funds are taking on more investment risk to find their footing after a year of losses, exposing them to greater stock market volatility. Meanwhile, colleges are using multi-year endowment returns before setting long-term budgets for everything from financial aid to cafeterias. In other words, if the bear market continues, the dorm-dining experience could soon get even more awkward.