There’s no strategic reason for that change — it’s just where the market is at.

“The vast bulk of our domestic equities are indexed to the Russell 3000 — it’s an efficient way of doing it,” said Mansco Perry III, executive director and chief investment officer of the Minnesota State Board of Investment, which manages more than $96 billion in public assets. “We’re extremely large, so we index a large proportion of our public equity assets.”

That means that more heavily weighted stocks in the index — typically the largest companies being traded — are the ones the Public Employees Retirement Association of Minnesota, the Teachers Retirement Association and the Minnesota State Retirement System are most heavily invested in.

Top 10 Minnesota public pension stocks, 2017:

  1. Apple
  2. Microsoft
  4. Facebook
  5. Johnson & Johnson
  6. JP Morgan Chase & Co.
  7. Exxon Mobil
  8. Alphabet(Google) Class A shares
  9. Berkshire Hathaway
  10. Alphabet (Google) Class C shares

Top 10 Minnesota public pension stocks, 2013:

  1. Exxon Mobil
  2. Apple
  3. Google
  4. Chevron Corp.
  5. Microsoft
  6. Johnson & Johnson
  7. JP Morgan Chase & Co.
  8. Wells Fargo
  9. AT&T
  10. IBM

Stocks comprise about 60 percent of the state’s investments. A growing part is private equity, real estate and other “alternative investments” like hedge funds. The investment board wants to increase the state’s private market holdings from 13.8 percent to 25 percent of its portfolio, according to a quarterly report. That comes with greater risks, but greater rewards as well.

“We’ve been investing in private market vehicles since the late 1970s,” Perry said. “For the last 30 years they’ve been our best performing asset class.”

Last week the investment board posted a 10.3 percent on all its investments for the fiscal year that ended in June, beating the 9.7 percent target.

Whether it’s a crash, a correction or a downturn, these good times won’t last forever, and Perry said the state’s investments are designed to withstand the ups and downs of the market.

“We’re a long-term investor — nobody can forecast when the downturns are going to be, so we have a diversified portfolio,” he said.

Though defined-benefit pension plans are supposed to pay as promised regardless of investment outcomes, a thriving market helps boost funds that are billions behind those promised payouts — though it won’t fix the structural deficits that will eventually cause those plans to run out of money.

The teachers’ fund is $6 billion short of its future liabilities, while PERA is $7 billion behind and the Minnesota State fund is $7 billion short — which leaves it capable of paying full benefits through 2049, according to financial disclosures. Barring any major policy change, that means there will not be money to pay the pension of a 30-year-old employee starting today at Minnesota State when she retires.




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