State Investment Officer Matt Clark reported this morning to the South Dakota Retirement System trustees that the SDRS portfolio’s market value was up 24.9 percent from July 1 through the end of March. The value was approximately $6.86 billion. That’s considerably better than the $5.6 billion at the close of the 2009 fiscal year on June 30, but there’s a long climb still ahead to get back to the $8.3 billion peak of several years ago. If the portfolio can finish fiscal 2010 up 25 percent, the system would still be under-funded by 7 percent, in terms of market value to known long-range liability.
The system is built on an average annual return assumption of 7.75 percent growth in market value. Assuming the portfolio can hit the 25 percent growth mark this year, the fund would still need to grow by more than the 7.75 percent average. In fact, tTo get back to fully-funded status, the average annual return will need to average 8.6 percent for the next five years; 8.2 percent for the next 10 years; 8.0 percent for the next 20 years; or 7.9 percent for the next 30 years. So there remains a challenge.