NEPC’s Margaret Belmondo spoke with Pensions & Investments about the strong performance of international equities and the factors driving their outperformance over the past fiscal year. Read the full article on P&I’s website to learn more about how public pension funds fared and the market forces behind their returns, or read excerpts below.
U.S. public pension funds chalked up a third straight year of positive returns for the fiscal year ended June 30, but unlike the prior two years, domestic equities was not the asset class that posted the highest returns.
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The big story of this past fiscal year was international equities.
“International equities had a standout year, delivering some of the strongest returns that we’ve seen in over a decade,” said Margaret Belmondo, partner and public fund team leader at investment consultant NEPC. “First, the U.S. dollar weakened significantly, down almost 10% (in the second half of the fiscal year), which was a meaningful tailwind for U.S.-based investors.”
For the year ended June 30, the Bloomberg U.S. Dollar Spot index returned 6.3%.
“Second, international markets are starting from a much more attractive valuation standpoint than the U.S., where large-cap growth stocks are highly concentrated and expensive, so that helped some of the flows going into international markets,” Belmondo said.
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