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PROVIDENCE, R.I. -- Rhode Island's pension fund lost more than 19 percent of its value over the last year, dropping from $7.8 billion to $6.1 billion in the last 12 months.
The $6.1 billion is where the state-run fund for state, local and public school teacher pensions stood on June 30, after paying out $200 million in benefits.
In a statement issued Wednesday, and in response to a series of question posed to him in recent days about the $1.7 billion investment loss, General Treasurer Frank Caprio said Rhode Island's pension plan is nonetheless "outperforming some of the nation's largest and well-followed funds. ''
By way of comparison, he cited California's huge government pension fund, which lost $56.8 billion over the last year, almost a quarter of its investment portfolio.
While Rhode Island's $6.1 billion pension fund has lost 19.18 percent of its value from July 1, 2008 to June 30, Caprio said: "Harvard's endowment is down an estimated 24 to 30 percent over the same time period, while CalPERS [California's fund] is down almost 24 percent and the S & P 500 was down 26.22 percent.''
"Through a top to bottom review, we have focused on asset-allocation, minimizing risk and reducing expenses," said Caprio, a likely 2010 candidate for governor. "We have liquidity and flexibility in our plan, which has benefited us during the past year."
His office takes credit, for example, for as much as $8 million to $9 million in fee savings by replacing the state's "active mangers and their higher expenses, such as their day-to-day trading costs.'' In their place, his chief investment officer, Kenneth Goodreau, said the treasurer's office hired "passive managers, while maintaining the same equity exposure through index funds with lower fees.''
Rhode Island's pension investments are currently divided into four broad classes: domestic equity 42 percent, international equity 20 percent, fixed income 25 percent, and real estate and private equity, 13 percent.
In September 2008, the pension fund reported a 12 percent loss from January, dropping from $8.4 billion at the beginning of the year to $7.38 billion at that point.
Despite this recent run of losses, state officials say there is no immediate danger for state and local employees and teachers whose retirement checks are drawn from the pension fund, which is made up of investment earnings and both employee and taxpayer contributions. These retired public employees are guaranteed pension payments for life, regardless of the stock market's performance.
