Posted 10:02 a.m. Thursday, Jan. 18, 2024
The State of Wisconsin Investment Board has announced preliminary calendar year 2023 investment returns for the Wisconsin Retirement System trust funds.
SWIB Announces 2023 WRS Preliminary Returns
The State of Wisconsin Investment Board (SWIB) today announced 2023 preliminary returns for the fully funded, $132 billion Wisconsin Retirement System (WRS).
The Core Fund, the larger of the two WRS trust funds with more than $122 billion in assets, ended the year with a preliminary one-year net return of 11.4% and a preliminary five-year net return of 9.3% The Core Fund’s 10-year and 20-year returns, net of external manager fees, continue to exceed its target return of 6.8% with SWIB outperforming the Core Fund benchmark for all these periods.
Strong absolute investment returns in four of the past five years are expected to result in a positive annuity adjustment for beneficiaries this spring and stable employer and employee contribution rates in 2025. SWIB’s solid investment management has delivered positive annuity adjustments in nine of the past 10 years. According to a recent study by Pew Charitable Trusts, despite recent high inflation, WRS retirees have experienced more protection from inflation compared to the typical public retiree.
“Significant market volatility over the past several years reinforces the importance of maintaining a fully funded pension system. Given the challenges investors continue to navigate, we remain focused on a long-term investment strategy for the WRS that is designed to weather a variety of market climates,” said SWIB Executive Director and Chief Investment Officer Edwin Denson. “We will maintain a disciplined process and stick to fundamentals to help ensure the pension fund can meet its obligations to WRS participants.”
SWIB diversifies its assets among many types of public and private investments and actively manages its assets to grow and protect the WRS trust funds. Over the last 20 years, SWIB’s active management and diversification generated over $29 billion for the Core Fund above what would have been earned in a low-cost passive portfolio consisting of 60% global equities and 40% domestic bonds. Further, SWIB’s investment management has added value to the WRS trust funds of more than $3 billion above benchmark returns over the five years ending December 31, 2023.
The Variable Fund, an optional stock-only fund with more than $9 billion in assets, ended the year with a preliminary one-year net return of 22.2% and preliminary five-year net return of 12.7% The Variable Fund’s 10-year and 20-year returns, net of external manager fees, were 9.3% and 8.4%, respectively.
The Department of Employee Trust Funds will soon provide estimated ranges for annuity adjustments for the Core Fund and the Variable Fund and announce actual adjustments in March. Investment performance also affects contribution rates for public employees and employers, with rates for 2025 to be set in June.
About SWIB
The State of Wisconsin Investment Board (SWIB), created in 1951, is an independent state agency responsible for managing the assets of the Wisconsin Retirement System (WRS), the State Investment Fund (SIF), and other state trust funds. As of Dec. 31, 2023, SWIB managed more than $155 billion of total assets, approximately 85% representing WRS assets. SWIB’s management of the WRS trust funds aims to provide a fully funded public pension for over 677,000 current and former employees of state agencies, the university system, school districts and most local governments. The WRS consistently ranks among the 10 largest public pension funds in the U.S. SWIB, a steady economic pillar for the state of Wisconsin, focuses on growing the trust funds, managing risk, and optimizing costs over the long term.