• 2018 was a year of challenging absolute performance for risk assets, although over longer periods the various PBUCC funds have produced positive returns
• The S&P 500 was down -4.4% for the year, and most other equity indices had lower returns. However, diversified exposures, like hedge funds in the PBUCC Equity Fund, helped contribute to performance
• PBUCC’s managers fared similar to peers during a challenging period for active management
• Over a longer three-year period, PBUCC’s returns for the various funds largely hovered around the peer average
• Post benefit increases, the annuities remain well-funded on various metrics
• Although we were aware of various risks to markets in 2019, we maintained a pro-risk posture going into 2019.
• Supporting the Pension Boards’ mission of “Faith and Finance.”
Early 2019 Overview
• As we know, 2018 was a year of challenging absolute performance for risk assets, with the S&P 500 detracting -4.4% for the year
• However, we have observed a strong market rebound in Q1 2019, with the S&P 500 returning 13.6%
• PBUCC’s funds have also experienced a strong rebound, more than recouping 2018 losses. The Equity Fund was up 11.92% in Q1 and the Northern Trust Global Sustainability Fund was up 11.89%.
• The PBUCC Balanced Fund returned 7.9% in Q1 2019, outperforming the strategic benchmark largely due to strong equity performance
• In contrast to a challenging period for active management in 2018, we observed positive manager returns over benchmark in Q1 2019
• Over a longer three year period, PBUCC’s returns for the various funds were all positive; for example, the Equity Fund returned 9.6% (vs. the peer median of 8.9%), the Bond Fund returned 2.6% (vs. the peer median of 2.8%), and the Balanced Fund returned 6.6% (vs. the peer median of 6.8%)
• The annuities remain well-funded and have improved funded statuses on most metrics in Q1 2019
• Although we are cautious of various risks to markets, we currently maintain a pro-risk posture.