U.S. Public Pensions Outperform Industry Average, Markit Reports U.S. Services Slowed in April


U.S. Public Pensions Outperform Industry Average, Markit Reports U.S. Services Slowed in AprilU.S. public pension funds recorded an average return of 1.87 percent in the first three months of 2014, exceeding the 1.66 percent median returns posted by the institutional investment funds, reported Wilshire Trust Universe Comparison Service on Monday.

However, the returns by the public pensions this year are less than the 5.2 percent posted in the first three months of 2013, reported Reuters.

Nonetheless the yearly average return by the public funds is still high at 12.94 percent. The double-digit growth by the pension funds last year created more room for states and cities to attend to the huge deficits in their retirement plans.

The report examined roughly 1,700 retirement plans, including corporate funds, endowments and foundations, which all add up to a combined sum of $3.5 trillion.


“While this is the third positive quarter in a row, returns remain below the classic 1.82 percent or higher quarterly return target required for an annualized 7.5 percent return,” Wilshire Managing Director Robert Waid said, in reference to the results.

In contrast, the Barclays U.S. Aggregate Index reported a return of 1.84 percent in the first quarter, while the Wilshire 5000 Total Market Index posted a return of 2.04 percent.

A separate report by London-based Markit Economics showed that U.S. services industry expanded slower than expected in April.

Markit said that its full non-manufacturing sector purchasing managers’ index plunged to 55.0 last month, down from March’s 55.3. A reading that exceeds 50 indicates expansion. The measure also exceeded April’s preliminary reading of 54.2.

“The final services PMI came in higher than the flash reading and signals only a very minor slowing in the rate of expansion compared with March,” said Chris Williamson, chief economist at Markit.

The final composite PMI, which incorporate service and manufacturing indexes, edged slightly lower to 55.6 last month from March’s 55.7. This was still higher than the preliminary reading of 54.9. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com