Maryland Pension Fund Loses Out Again to Indexed Alternative
FOR IMMEDIATE RELEASE:
ROCKVILLE, MD (August 24, 2020) — The Maryland Public Policy Institute today urged Maryland to shift how it invests its $53 billion pension portfolio after another year of lackluster returns from the Maryland State Retirement and Pension System in Fiscal Year 2020.
“For the fiscal year ended June 30, the Maryland State Retirement and Pension System retuned a mere 3.6 percent. While some policymakers declared victory, the fund performance was 1.6 percent below the 60-40 stock-bond index that is widely considered the gold standard in institutional portfolio measurement. With a $53 billion portfolio, the fund's lost income was $850 million.
“The state would be better off firing all of its outside managers and paying the staff to stay home once the fund is indexed,” said Visiting Fellow, Jeff Hooke.
“In a story that repeats itself every year, Maryland’s pension fund once again underperformed the 60-40 stock-bond index for the fiscal year that ended on June 30, 2020. Had the fund followed Maryland Public Policy Institute's recommendation from the 2018 report and indexed the vast majority of its portfolio, the state could have saved hundreds of millions in Wall Street fees and still end up with superior investment returns. The 2020 result therefore highlights why Maryland should immediately follow the approach that the Public Employees’ Retirement System of Nevada has taken, and require most of its pension portfolio to be invested passively," said Senior Policy Analyst Carol Park.
Learn more about the Institute’s pension research at mdpolicy.org.
About the Maryland Public Policy Institute: Founded in 2001, the Maryland Public Policy Institute is a nonpartisan public policy research and education organization that focuses on state policy issues. The Institute’s mission is to formulate and promote public policies at all levels of government based on principles of free enterprise, limited government, and civil society. Learn more at mdpolicy.org.