The State of Wisconsin Investment Board (SWIB) invests assets for the Wisconsin Retirement System (WRS) that are held in the Core Retirement Investment Trust Fund (Core Fund) and the Variable Retirement Investment Trust Fund (Variable Fund). Together, these funds are known as the Retirement Funds.
We provided unmodified opinions on the financial statements of the Retirement Funds investment activity as of and for the year ended December 31, 2024. These financial statements report the investments and the investment activity of the WRS. Our unmodified opinions are included in SWIB’s 2024 Retirement Funds Annual Report. We conducted the financial audit by auditing SWIB’s financial statements of the Retirement Funds investment activity in accordance with applicable government auditing standards, issuing our auditor’s opinions, reviewing internal controls, assessing compliance with certain Wisconsin Statutes and investment guidelines, and issuing our auditor’s report on internal control and compliance.
In 2024, the Core Fund made up 94.0 percent of total investment assets of the Retirement Funds
Total investment assets in the Core Fund were $177.7 billion as of December 31, 2024. The Core Fund investments include a distinct mix of investment types, such as public equities, fixed income, and private fund investments.
Total investment assets in the Variable Fund were $11.4 billion as of December 31, 2024. The Variable Fund assets are primarily made up of public equities.
Net investment position is a measure of overall financial condition. The Core Fund reported net investment income of $12.7 billion in 2023 and $10.3 billion in 2024, or a decrease of 18.9 percent. The reported one-year investment return, net of all fees and costs, decreased from 11.4 percent in 2023 to 8.5 percent in 2024 and exceeded the benchmark of 7.4 percent. The Core Fund investment return in 2024 is largely attributed to positive investment returns from public equity investments.
As noted, net investment position is a measure of overall financial condition. The Variable Fund reported net investment income of $1.8 billion in 2023 and 2024. The reported one-year investment return, net of all fees and costs, decreased from 22.2 percent in 2023 to 18.7 percent in 2024 and exceeded the benchmark of 18.3 percent. The Variable Fund investment return in 2024 is attributed to positive investment returns from public equity investments.
Historically, SWIB’s goal had been to increase the percentage of assets managed internally because external management is more expensive. The percentage of assets managed internally has decreased from 50.7 percent in 2020 to 39.1 percent in 2024. SWIB staff attribute decreases in internal management of assets over this time frame to a number of factors, including an increase in the overall allocation to private fund investments, such as private equity limited partnerships, which are managed externally. SWIB indicated increases in private fund investments are intended to help meet the long-term expected rate of return of 6.8 percent. SWIB also noted decreases in allocations to public equity investments, which are largely managed internally, contributed to the decline in assets managed internally.
Management fees are charged by external investment managers. Management fees typically include a base fee and a performance fee, which is typically calculated based on investment returns. The performance fees fluctuate each year based on the performance of the underlying investment. External investment management fees increased from $827.4 million in 2023 to $1.2 billion in 2024. In comparison, external investment management fees reported by SWIB totaled $1.8 billion in 2021 and $1.1 billion in 2022.
