PIERRE | The investment portfolio for the South Dakota Retirement System grew more than $1.465 billion during fiscal 2017. That was on top of a starting value of $10.851 billion.
South Dakota’s gain of 13.8 percent, compared with other states, ranked 10th for one year, 33rd for three years and first for five years, Tammy Otten said.
Otten, one of three assistant state investment officers, said the retirement system performed better than the capital markets benchmark in nine of the past 10 years.
Her remarks came Thursday during a presentation at a joint meeting of the retirement system’s trustees and members of the Legislature’s Retirement Laws Committee.
“This is a much more risk-averse portfolio at this point,” she told them.
The state's retirement system portfolio finished 2.85 percent better than the capital markets benchmark of 10.96 percent growth for the fiscal year that ended June 30, according to Otten
“It all came from the underlying portfolios,” she said.
Global stocks and real estate opportunities performed notably for South Dakota. They finished 1.83 percent and 1.58 percent better than averages for their counterparts.
The South Dakota Investment Council operates on a contrarian strategy, state investment officer Matt Clark said. That generally has meant buying at low prices and selling when they seem to be peaking.
Two years ago the council began gradually shifting allocations into more cash and cash equivalents. U.S. stock prices kept climbing, however. South Dakota could have seen 18 percent growth in fiscal 2017 if the council still held those same positions, according to Clark.
The council finished the 2017 fiscal year with 56.7 percent of its portfolio invested in positions other than cash and cash equivalents. The council’s range is a minimum of 50 percent and a maximum of 85 percent.
“Whether we stay the course will dictate our eventual outcome,” Clark said. “On average it’s been well worthwhile.”
The system has more than 84,000 members, including more than 26,500 retirees. They are current or past employees of state government, state universities, public schools, city and county governments and various special units.
The system added a second retirement program for employees hired after June 30. The new system features different benefits. Retirement ages are different too. The original system remains age 65, while the second system is age 67.
Three classes of employees and their government employers pay matching amounts into the system. They contributed $228.5 million in 2016. Benefits totaled $487 million. Investment earnings cover the difference.