2 weeks Ago By Matthew Medsger
While acknowledging no one could have predicted the current state of world affairs , the state’s pension fund managers say they think the state retirement accounts are generally safe from an increasingly volatile market . According to Michael Trotsky, the executive director and chief investment officer of the Pension Reserves Investment Management Board , the state’s pension funds are invested in “a carefully constructed, broadly diversified portfolio” that would “perform well in any environment.” “I can assure you the (Pension Reserves Investment Trust) Fund is well positioned to navigate these volatile markets, and there have been no disruptions to PRIM operations,” Trotsky wrote in a recent memorandum addressed to the PRIM board and the general public.
The memo came as the PRIM board acknowledged it had received a ‘large volume of inquiries’ about the stability of the funds. Trotsky reiterated those remarks on Wednesday during a meeting of PRIM’s Stewardship and Sustainability Committee. Pension fund managers are not new to market volatility, as evidenced by their ability to weather the COVID-19 pandemic, and there are some remarkable similarities between the economy in 2020 and the economy now in the midst of a global trade war, Trostky told the committee.
“Five years ago, the market volatility was initiated by the outbreak of the global COVID-19 pandemic. This time, the volatility was initiated by the outbreak of a tariff war between the USA and nearly all our global trading partners,” he said. “Five years ago, during the COVID-19 sell-off, U.
S. equity markets were down approximately 25% from peak to trough. This time, U.
S. markets on the worst day so far were down approximately 15% from peak to trough,” he said. While nobody could have predicted either volatile circumstance, Trotsky said the state’s pension funds should be immune to the current market effects.
“We always prepare the PRIT Fund for unknown sources of volatility by adhering to our fundamental principles of diversification and risk management,” he said. As of now, there is no need or intention for the pension fund to seek different investments, according to Trotsky. “We do not believe in tactical, short term asset allocation because we have observed that no one is consistently good at predicting the future.
Most important, we are very pleased that our carefully engineered PRIT Fund portfolio has performed very well over a long period of time in both up and down markets, and we are confident that it will serve us well through the current market and economic challenges,” he said..
