Fiscal 2015-16 was a rough year for the state Investment Management Board, which saw its assets fall by roughly 0.3 percent, or about $470 million, during the year.
"In the short term, world markets can work against you, and it can look bad for a short period," IMB executive director Craig Slaughter said of the past year.
During the budget year, the overall value of assets managed by the board dropped from $17.18 billion to $16.71 billion, while pension fund assets declined from $13.63 billion to $13.2 billion.
While the past year was tough, the Public Employees Retirement System has experienced 6.9 percent growth over the past five years, while the Teachers Retirement System has had 6.8 percent five-year growth.
"Everyone needs to be cognizant that these pension funds are long-term projects," Slaughter said.
While the 2015-16 downturn kept the IMB from meeting its goal of 7.5 percent long-term growth in pension funds, Slaughter noted that the 7.5 percent rate assumes rates of inflation and salary increases for teachers and state employees that haven't occurred in recent years.
Slaughter said part of the reason for the 2015-16 dip was the board's selling of some fixed income securities in anticipation of rising interest rates that didn't increase as much as expected during the budget year.
"It's one of the biggest risks in investing right now," he said of holding fixed income securities should interest rates start increasing.
"If the economy takes off, interest rates should start rising," he said. "The negative consequences of that are a whole lot greater than the consequences of any potential revenue increase if interest rates fall further."
While the losses for fiscal 2015-16 may sting, they have to be put into perspective of overall growth in assets managed by the Investment Management Board.
Five years ago, on June 30, 2011, total assets were $12.85 billion, and pension fund assets were $10.19 billion, which even with the hiccup of fiscal 2015-16, amounts to $3.86 billion of growth - which averages out to 7.6 percent growth each year.
Reach Phil Kabler at philk@wvgazettemail.com, 304-348-1220 or follow @PhilKabler on Twitter.