U.S. public pension funds posted another strong fiscal year, driven by outperformances in domestic and international public equities.
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Asset allocation was something that many pension funds reaped benefits from in 2026, noted Margaret C. Belmondo, partner and head of public fund practice at NEPC. In a statement to P&I, Belmondo noted, “the plans that stayed fully invested and held meaningful non-U.S. equity exposure were generally rewarded, while more conservative portfolios with larger fixed-income allocations lagged.”
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This is especially true for pension systems riding the high of technology-led outperformances, including SpaceX’s launch onto the public market. Several pension funds holding stakes in the $1.77 trillion tech giant reported massive growth following the company’s IPO in late June. However, these gains did not likely contribute to the general outperformance, as only few plans “had meaningful SpaceX exposure,” Belmondo said.
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Rather than believing outperformance will lead to future gains, Belmondo advised trustees to focus on if they’re hitting their assumed return over 10 and 20 years, and whether contributions are being made in full or not.
“There’s plenty to watch right now, from how concentrated the market is in AI names to where inflation and rates go next,” she stated. “In our view, the best thing a board of trustees can do after a year like this is rebalance and stay the course, not reach for more risk.”
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