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Luzerne County&rsquo;s employee pension fund has largely bounced back from a first-quarter coronavirus blow, the adviser reported at Thursday&rsquo;s virtual county Retirement Board meeting.
				The fund was $254.5 million at the start of the year but down 12.74% to a balance of $218.7 million through March 31.
				As of Wednesday, the fund was valued at nearly $268.4 million, with a year-to-date return of 5.35% that compares favorably to equity and bond markets, said adviser Richard J. Hazzouri, of Morgan Stanley.
				Hazzouri said he was &ldquo;very pleased&rdquo; with the fund&rsquo;s recovery and growth.
				The global equity market had ended the first quarter down a much more dismal 22%.
				About $51.5 million of the portfolio was in cash and short-term bonds in April, largely due to a plan underway before the virus hit to liquidate $38 million parked in long-term bonds, Hazzouri had said.
				This allowed the fund to weather dramatic market volatility, take advantage of new risk-based investments and pay retirees approximately $1.5 million per month without being forced to liquidate in a down market, he had said.
				Preserving so much capital meant the fund did not have &ldquo;as much ground to make up&rdquo; after the first quarter, Hazzouri told the retirement board Thursday.
				&ldquo;We were never in a position where we had to sell securities in order to make monthly payments to retirees,&rdquo; Hazzouri said.
				Hazzouri said his team continues to observe a strong market but still-fragile economy.
				He expects a &ldquo;choppy market&rdquo; through the year due to the nation&rsquo;s pending general election and continued uncertainty related to the pandemic.
				The fund&rsquo;s investment mix is currently half stocks, 20% alternative investments and the remainder fixed income, although an asset allocation remix is currently under discussion by the board and adviser.
				Forecasting &ldquo;much more muted&rdquo; investment returns with heightened volatility compared to the past, Hazzouri said the fund will rely more on private capital investments to achieve a targeted 7% investment return for the year. Some examples of the fund&rsquo;s newer capital commitments he cited: Oaktree Opportunities Fund XI, $5 million; Goldman Sachs Vintage VIII, $5 million; and Fortress Lending Fund II, $2.5 million.
				While there are credit and illiquidity risks in private capital, Morgan Stanley has &ldquo;very deliberately&rdquo; chosen options based on risk and return profiles, he said.
				Hazzouri said his team will &ldquo;try hard&rdquo; to reach the 7% return objective without overexposing the fund to market risk.
				&ldquo;The next couple of months will be challenging. While we&rsquo;re pleased with where we&rsquo;re at, we want to make sure that we don&rsquo;t let our guard down,&rdquo; Hazzouri said.
				Taxpayer contribution
				Next year&rsquo;s taxpayer subsidy into the fund will remain at $14.5 million, county officials said.
				Fund actuary Gregory M. Stump, of Boomershine Consulting Group estimated the contribution will be the same as 2020 based on demographic data and 2020 investment returns.
				Shoring up is necessary to close a shortfall that emerged years ago, when investment earnings and employee contributions stopped keeping pace with obligations for future pensions that are guaranteed by law.
				Stump told the board Thursday this shortfall &mdash; officially called the &ldquo;unfunded liability&rdquo; &mdash; is $96 million.
				The plan is 71.4% percent funded, which means it&rsquo;s currently equipped to pay 71.4% of future obligations, Stump said.

State of Luzerne County employee pension fund discussed