During the August meeting of the State Teachers Retirement Board, Investment staff and consultants shared fiscal year 2022 investment returns. Despite challenging market conditions for stocks and bonds, STRS Ohio investments outperformed the board-approved benchmarks, preserving $1.8 billion in value for the teachers’ pension fund (net of all fees, costs and expenses).
The fiscal year 2022 total fund return was -3.61%, besting the total fund benchmark of -5.62% and well ahead of the median fund return of U.S. public funds of -7.91% (as reported by the Wilshire Trust Universe Comparison Service). Fiscal 2022 marks the first negative return in more than a decade for STRS Ohio and follows a 29.28% return in fiscal 2021.
STRS Ohio currently manages about 70% of assets internally. CEM Benchmarking estimates STRS Ohio saves about $100 million per year through internal management. A portion of compensation for STRS Ohio’s investment staff is earned through performance-based incentives. Based on investment performance for fiscal year 2022, as well as the trailing five-year period, the Retirement Board approved performance-based incentive payments totaling approximately $9.7 million at its August meeting. This amount reflects a 15% reduction based on fiscal 2022’s negative absolute return, as outlined in the performance-based incentive program. Incentives are more heavily weighted toward five-year returns, aligning with STRS Ohio’s interests as a long-term investor. Only eligible investment staff are included in the PBI program.