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Defensive investments helped pension fund beat markets in 2018

The Rhode Island pension fund finished well ahead of U.S. and global stock markets in December due to the defensively positioned investments in the fund's portfolio.

In a month where U.S. stocks fell more than nine percent, the pension fund posted a -2.88 percent return, outperforming the Russell 3000 US stock market index by 6.4 percent. This outperformance represents more than $500 million of value that was preserved due to the defensive positioning of the pension fund's investment strategy.

While most of the Rhode Island pension fund is invested in traditional strategies for growth, nearly 40 percent of the fund is invested in defensive assets like low-risk bonds and cash to provide protection from challenging market conditions such as the stock market downturn that occurred in December.

The pension fund's December returns were led by U.S. Treasuries, which returned 5.57 percent as investors sought quality, and by systematic trend following strategies, which returned 3.97 percent.

The diversified investment strategy also served Rhode Island well across the 2018 calendar year.

In the 12 months ending on December 31, 2018, the fund returned -2.69 percent, compared to a passive 60 percent stock and 40 percent bond portfolio, which would have returned -5.52 percent.

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Evan England, Director of Communications (401) 222-2240 | (401) 439-2199 (mobile) evan.england@treasury.ri.gov

Related links

  • Department or agency: Office of General Treasurer Seth Magaziner
  • Online: http://treasury.ri.gov
  • Release date: 01-25-2019

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