W.Va. investment board’s
returns increase in 2003
February
06, 2004
By Paul Wilson
Staff Writer
The West Virginia Investment Management Board had
an average return of 22.4 percent growth on investments
in 2003, up nearly 30 percent from the previous year.
“We’re guardedly happy,” Craig
Slaughter, the group’s executive director,
said Thursday after the board’s quarterly meeting. “It’s
always great to have that growth, but there’s
a lot of uncertainty about where the economy’s
going to go and how it will affect the stock market.”
The board made $1.006 billion on
investments of $5 billion for pension plans and
employment security
plans for state employees, Slaughter said. That doesn’t
count another $3 billion in short-term investments
the board manages, which include workers’ compensation
and general revenue funds.
“It’s enjoyable that we’re at
the end of the second-worst bear market. The first
was the Depression,” said Steve Holmes, a St.
Louis-based consultant with Summit Strategies Group,
which has worked with the investment board since
it was created in 1998. “We enjoyed a good
year, finally. But the outlook for the next 10 years
is a conservative one.”
The strong 2003 increased the board’s average,
five-year growth from 2.2 percent to 4.9 percent,
Slaughter said. The investment pool was stronger
in fixed income investments, such as bonds that pay
a fixed interest rate, than on investments in stocks.
That’s because value stocks, which the board
prefers, did not perform as well as more volatile
growth stocks last year, Slaughter said.
“Value stocks don’t do as well as growth
stocks in periods like this,” he said. But
the group would rather invest in more of a sure thing,
he said.
“Consider all those growth-stock dot-com companies
that on paper were worth a lot, but really weren’t
worth anything” in the late 1990s, he said.
The board’s investments performed 3.5 percent
better than a 60 percent broad-equity/40 percent
fixed-income benchmark compiled from the Standard & Poor’s
500 and Saloman Broad Investment Grade indices. Slaughter
attributed the strong performance to active money
managers and investment in small companies, among
other things.
Board officials warned, though, that the stimulus
from the last tax cut will soon fade, and that job
growth and salary increases are needed for continued
economic gains.
“Given where we were in the 1980s and 1990s,” Slaughter
said, “it’s logical to expect the returns
in the next 10 years won’t be like those in
that 20-year period.”
To contact staff writer Paul Wilson, use e-mail
or call 348-5179.
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