(Bloomberg) — U.S. state and local-government pensions are coming off their weakest investment performance in three years, weighed down by losses in international stocks and weak bond returns, according to data from Wilshire Associates Inc.
The pensions logged median increases of about 3.4 percent for the 12 months ended June 30, according to data to be released Tuesday by the Santa Monica, California-based consulting firm.
For the public pensions, which typically target returns of 7 percent or greater, it was the slimmest gain since they earned about 1.5 percent in fiscal 2012. Plans with assets greater than $5 billion performed best, reporting median jumps of 3.6 percent, according to Wilshire’s Trust Universe Comparison Service.
“It’s been a difficult environment to get quality returns,” Robert Waid, a managing director at Wilshire, said in an interview.
Global market turbulence depressed international stocks in the year examined by the Wilshire release. The company cited an MSCI index of international equities that it said lost about 5.3 percent. The Barclays U.S. Aggregate bond index gained almost 2 percent.
A generic portfolio of 60 percent stocks and 40 percent bonds returned 5 percent, according to Waid.