If you pay attention to what’s happening on Wall Street, you know 2025 is off to a bumpy start in the global financial markets.

Concerns over tariffs and a potential trade war, coupled with investor anxiety about inflation and a possible recession, have led to significant swings in major indexes like the S&P 500.

While uncertainty and volatility can be disconcerting, the PERA Board and staff take a very careful, thoughtful approach to investing that balances risks and potential returns.

What does volatility mean for Colorado PERA?

For institutional investors like Colorado PERA, ups and downs in the markets are expected. Rather than try to make decisions based on what happens day-to-day, PERA’s approach involves staying the course during times of volatility.

The PERA Board of Trustees has taken considerable care to develop an investment policy and strategic asset allocation that focus on diversification and long-term performance to ensure the sustainability of the fund and meet pension obligations for our current and future retirees.

This disciplined approach means PERA remains secure and retirees can count on receiving monthly benefits they cannot outlive.

Maintaining a strategic portfolio

PERA’s investment staff, led by Chief Investment Officer/Chief Operating Officer Amy C. McGarrity, manages more than $61 billion in assets for the Defined Benefit Plan. The portfolio includes a diverse mix of assets across a broad range of public and private markets, including public equities, fixed income, commercial real estate, private equity, and alternative assets. This diversification helps limit the potential negative impact of any one type of investment experiencing losses.

“Strategic asset allocation is the single largest driver of investment returns, and our portfolio includes a wide variety of assets meant to perform over multiple decades,” McGarrity said. “We believe in remaining invested in the markets so we can continue to generate returns for our members and benefit recipients for many years to come.”

The portfolio also undergoes regular review. Every four or five years, the Board conducts what is known as an asset/liability study to examine the portfolio and ensure the asset allocation aligns with PERA’s funding goals. The most recent study, completed in 2024, led the Board to adopt new asset allocation targets that reduced the amount allocated to Global Equity and increased the amount allocated to Private Equity and Real Estate.

The updated strategic asset allocation is expected to provide incrementally greater diversification in the portfolio with the goal to slightly lower risk and add potential for higher returns over time.

READ MORE: PERA Board Adopts New Strategic Asset Allocation Following Study

Focusing on long-term performance

PERA’s assumed rate of return—one of the key numbers we use to forecast how much money the fund will have on hand to pay benefits in the future—is 7.25 percent. While the actual return in a given year may be higher or lower than 7.25 percent, the goal is to meet the assumed rate of return over a period of 30 or more years. Our annualized return over the past 30 years is 8.3 percent, gross of fees.

By maintaining a well-diversified portfolio and focusing on long-term returns, we’re making sure the trust funds that provide retirement and other benefits to Colorado’s public workforce are well-positioned to weather market volatility.