Oklahoma Teachers posts -9.5% return for fiscal year

Oklahoma Teachers' Retirement System, Oklahoma City, posted a net return of -9.5% for the fiscal year ended June 30, according to an investment report prepared by Aon, the pension fund's investment consultant.

The return exceeded the policy benchmark of -12%.

Sarah Green, executive director of the $19.6 billion retirement system, attributed the outperformance "almost entirely" to its private investments, which returned 24.7%, eclipsing the benchmark return of -22.2%.

Oklahoma Teachers also surpassed its policy benchmarks on a three-, five- and 10-year basis, earning an annualized net of 6.6%, 6.9% and 8.7%, respectively. The benchmark returns for the respective periods were 6.2%, 6.8% and 8.2%.

The pension fund had earned a record net return of 33% for the fiscal year ended June 30, 2021.

The overall loss for the current year comes amid a challenging market environment in public equities and fixed income. For the year ended June 30, the Russell 3000 index and Bloomberg U.S. Aggregate Bond index returned -13.9% and -10.3%, respectively, compared with returns of 44.2% and 4.6% for the year ended June 30, 2021.

After private investments, real estate was the pension fund's next top-performing asset class, returning a net 24.5%, vs. 29.1% for its benchmark.

All other asset classes posted negative returns. Fixed income returned a net -13.3%, followed by U.S. equities, which returned -13.9% and international equities, which returned -21.2%. Their respective benchmarks were -11%, -13.9% and -19.5%.

As of June 30, the pension fund's actual allocation was 39.9% U.S. equities, 24.9% fixed income, 15.7% international equities, 10% private investments, 8.3% real estate and the rest in cash. Its target allocation is 38.3% U.S. equities, 22% fixed income, 16.7% international equities, 10% real estate, 8% private investments and 5% private debt.