Houston Police Officers’ Pension System posted a preliminary net return of 7% for the fiscal year ended June 30.

The $7.1 billion pension fund’s return fell short of the benchmark return of 7.3% for the period, according to an investment update on its website.

Annualized returns for the three, five and 10 years ended June 30 were not provided.

The pension fund had posted a net loss of 1.3% for the fiscal year ended June 30, 2022.

The latest fiscal year’s improvement over the prior period reflects improved returns both in equities and fixed income. For the year ended June 30, the Russell 3000 and Bloomberg U.S. Aggregate Bond index returned 19% and -0.2%, respectively, well above the respective returns of -13.9% and -10.3% for the year ended June 30, 2022.

By asset class, domestic equities posted the strongest preliminary net return for the fiscal year ended June 30, with 16.5% (below its benchmark return of 19%); followed by international equities at a net 13% (above its 12.7% benchmark); high yield, 9.2% (9%); fixed income, 1.8% (-0.9%); and alternative investments, 0.5% (-0.7%).

The pension fund’s alternative investments asset class consists of private equity, real estate, illiquid credit and hedge funds strategies, according to its website.

As of June 30, the actual allocation was 43.4% alternative investments, 29.1% domestic equities, 18.7% international equities, 7.9% fixed income, 4.5% high yield and -3.6% cash.

The target allocation is 45.8% alternative investments, 28.8% domestic equities, 19.2% international equities, 10.2% fixed income, 5.8% high yield and -9.8% cash.

According to the website, cash is negative in recognition of the leverage in the pension fund’s public equities portfolio.

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