The State of Wisconsin Investment Board (SWIB) touted its 2019 year-end returns, with officials commenting on a preliminary gross return of 19.9%.
SWIB outperformed its benchmarks for the year, five-year and 10-year timeframes, exceeding the long-term investment return target of 7% for the state investment portfolio that includes two retirement system funds with more than $108 billion.
SWIB’s entire portfolio totals $122 billion.
“We are proud the strong performance in 2019, but we remain aware of the economic and geopolitical risks that create headwinds for future returns,” David Villa, SWIB executive director and chief investment officer.
He added that the board’s strategy is designed to add additional value beyond what the markets provide and to fulfill SWIB’s mission to support public worker’s retirement security.
Officials estimate that over a 20-year period the active management and diversified holdings of the portfolio generated $37.1 billion for the retirement fund above what would have been earned from low-cost passive investment program of 60% global equities and 40% domestic bonds.
Topping the charts is SWIB’s Variable Fund, an optional stock-only fund with nearly $9 billion, ended 2019 with a return of 28.6%.
Also this week, trustees are welcoming Anne-Marie Fink to SWIB as private markets and funds alpha managing director. In this new role, she oversees private equity real estate, hedge funds, externally managed accounts, private debt and venture capital portfolios.
Last year, officials allocate more than $600 million in new investments across alternatives in the second quarter. Private equity investments included: Charlesbank Credit Opportunities Fund II ($75 million); Flexpoint Fund IV ($85 million); KLH Capital Fund IV ($27.5 million); Varsity Healthcare Partners III ($50 million); SPC Wilson Point ($160 million) and a co-investment ($80 million).
“Through a combination of skill-based portfolio allocation and construction techniques that generally outperform passive market indexes over the long term, SWIB is working to add value to the trust funds so that we can help deliver the promises made to the over 635,000 participants in the system,” Villa said. “As we look to an uncertain economic future, this strategic approach becomes even more critical to maintain a fully funded pension system.”