AP NEWS

State of New Mexico investment funds down 3.5% in shaky 2018

April 17, 2019

The state of New Mexico’s three investment agencies weathered a rocky 2018 on the stock market relatively well, despite an overall loss of $1.8 billion, or 3.5 percent, to teacher and state employee pension funds and other funds.

In comparison to 60 peer funds from other states and large cities, New Mexico’s investments performed in the top 16 percent, with the Educational Retirement Board fund for teachers performing in the top 1 percent, according to the Legislative Finance Committee’s investment report covering 2018.

The retirement board’s fund dropped 2.9 percent, the Public Employee Retirement Association lost 6.5 percent, and the Land Grant Permanent Fund and Severance Tax Permanent Fund managed by the State Investment Council combined fell 1.9 percent.

These declines stemmed from the Standard & Poor’s 500 falling 6.2 percent in 2018, the Dow Jones Industrial Average slipping 5.6 percent and the Nasdaq Composite shedding 3.9 percent — considered the worst annual performance for all three indices since 2008.

“One year does not mean much,” said Bob Jacksha, chief investment officer for the Educational Retirement Board fund, which has the retirement account for 158,000 teachers at K-12 schools and colleges and universities. “We handle our portfolio to do better in difficult markets but still relatively well in bull markets.”

Jacksha said investment eyes are more focused on how funds perform over 10 years or more. Each of the state funds still exceeded the targeted performance of about 7.25 percent gain over 10 years, according to the LFC report.

The four funds combined ended 2018 with $50.9 billion. The Educational Retirement Board fund carried $12.8 billion, Public Employee Retirement Association fund $15.5 billion, the Land Grant Permanent Fund $17.3 billion and the Severance Tax Permanent Fund $5.1 billion, the Legislative Finance Committee reported.

Jacksha said all the state investment funds over the past 10 years have diversified to lower overall risk portfolios. The ERB teachers’ fund has focused on relatively low-volatility funds, while PERA’s state employee fund had lower returns because of its lower-risk asset allocation. PERA has accounts for more than 100,000 state employees and retirees.