The Washington State Investment Board, a $63 billion pension, quietly released its first quarter report in late May and no one seems to have noticed. Little wonder; there’s not much that surprises in it. Returns on the private equity portion of its portfolio, which accounted for 21.8 percent of the whole enchilada as of March 31, were – 2.0%. That’s in stark contrast to the 10.2% that the portfolio returned in the first quarter of 2007.
It’s not all doom and gloom (yet). WSIB’s one-year-return, as of the first quarter, was 14.9% compared with the 10.5% returns of the S&P 500, which, right or wrong, is the benchmark the pension uses. The 10-year performance of WSIB’s private equity portfolio compared with the S&P 500 looks very similar. WSIB has enjoyed 14.1% returns to the S&P’s 10.9%.
Expect second and third quarter figures to look the same. WSIB bumped its 17% allocation to private equity to 25% last November after several years of huge returns tied to the many mega buyout funds in its portfolio. (Its three-year private equity return, for example, averages out to a stunning 25%.) But with the credit markets still all-but-kaput, and those megafunds struggling to buy and sell anything, the pension must be preparing to see flat to negative returns for a while.
Here’s its first-quarter report, if you’re interested in checking it out.