State Investment Board reports strong returns and first-year incentive payouts; committee requests detail on benchmarks and fees

The State Investment Board briefed the Budget Section on investment performance, fee savings and incentive compensation.

Jody (State Investment Board) and Scott Anderson, CIO for the Retirement Investment Office, presented performance metrics showing strong excess returns for fiscal year 2025 and comparative rankings among peer sovereign and pension funds. The board presented a graphic indicating the legacy fund, PERS and other client funds ranked in top national percentiles versus benchmark peers; presenters said their consultant peer set includes more than 100 sovereign-wealth and pension funds.

Jody said the program’s in‑house investment work contributed to estimated fee savings projected for fiscal year 2026 — roughly $9 million net after estimated internal expenses — and that the move toward more direct/internal management is designed to reduce external fund-manager fees over time.

She also described the inaugural incentive-compensation payouts tied to investment outperformance: the program uses a multi‑year rolling average; in the first year 12 employees were eligible and received awards under the pool described. Jody said the total incentive pool and individual payouts are listed in the board materials and that the governor has placed a moratorium on further adjustments while the program is reviewed.

Senators asked for supporting documentation: Senator Cleary requested lists of the policy/pure funds used as benchmarks and a three‑year summary of fees paid to external managers; she also asked for the list of positions eligible for incentive payouts. Board staff agreed to provide the requested lists and fee studies.

Scott Anderson explained technical benchmarking terms (including corridor benchmarks used for private-market exposures) and described how internal and external manager selection and portfolio construction differ.