Ex-Teacher-Turned-Fund Manager's Bold Bet On Rising Rates Propels Turned A Small Pension Fund Into A Top Performer — Here's How

A small Massachusetts pension fund has outperformed its peers, thanks to a bold move by its manager, a former schoolteacher.

What Happened: The Plymouth County Retirement Association, a $1.4 billion pension fund, has seen a remarkable rise in its performance, landing it in the top 10% of U.S. pensions over the past three years. This success can be attributed to an early and astute bet on rising interest rates, reported The Wall Street Journal.

Peter Manning, the fund’s investment director, made the call that interest rates would increase, which proved to be a lifeline for the fund during the last two years when rising rates negatively impacted both stocks and bonds.

Despite the recent market rally, Manning remains steadfast in his belief that rates will not fall soon. He asserts that the best way to grow the pension fund in the long term is by avoiding significant losses rather than chasing high returns.

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Under Manning’s leadership, the fund delivered an average annual net return of 5.7% over the last three years, outperforming 92% of U.S. public retirement funds. This success was achieved by reducing exposure to Treasurys and public stocks before their decline in 2022 and reinvesting the funds in infrastructure, private equity, and inflation-protected debt.

 "A lot of our clients made moves on the margin," Daniel Dynan, a managing principal at Meketa Investment Group and Plymouth County’s investment consultant, remarked. "The difference in Plymouth is the magnitude of the change."

The fund, comprising just 10,500 members, stands as an unexpected trendsetter. Nationally, U.S. public pensions, serving 34 million members, ensure retirement and benefit payments, as reported by the Urban Institute, a nonprofit think tank. Plymouth County, located south of Boston, includes predominantly middle-class suburbs, alongside affluent enclaves and urban areas marked by grit. The county’s political landscape is divided between Democratic and Republican voters.

Why It Matters: The Plymouth County Retirement Association’s success is a testament to the impact of unconventional investment strategies. This comes at a time when the investment landscape is undergoing significant changes, with even the world’s largest pension fund considering diversifying its portfolio with Bitcoin BTC/USD.

Moreover, Manning’s approach is in stark contrast to the current market sentiment, with many fund managers expecting rate cuts and being bullish on stocks.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote

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Posted In: NewsGlobalSuccess StoriesMarketsFund ManagerKaustubh BagalkotePeter Manning
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