Overseas Stocks Drive Double-Digit Returns for State Plans Like Louisiana and New York

State pension systems that positioned themselves for international equity exposure are capturing substantial outperformance in fiscal 2026, with overseas markets delivering double-digit returns across major public funds. Louisiana State Employees' Retirement System, the $18.7 billion plan, achieved an 18.4% net return, with Chief Investment Officer Bobby Beale crediting "broad strength in equities" across both domestic and international markets. The outsized gains emerged from concentrated positions in emerging markets and international small-cap equities, which returned 48.7% and 31.8% respectively—substantially exceeding the plan's 27.4% domestic equity return. Louisiana maintains a 20.1% international allocation and manages emerging market exposure through three active managers: City of London, Westwood, and LSV, with China representing the plan's top international exposure.

New York State Common Retirement Fund similarly benefited from international positioning, posting 11.9% returns on its $295.4 billion asset base. The fund's approximately 13% allocation to non-U.S. equities generated 24.41% returns during the fiscal year, and the plan reinforced this conviction by deploying $1.4 billion in overseas equities earlier in 2026. The capital deployment targeted both established and emerging market opportunities, with $700 million allocated to an RBC-managed emerging markets fund and an equivalent amount to the MFS International Growth Equity Fund.

California's massive public pension ecosystem similarly demonstrated the power of international diversification. CalPERS, the nation's largest public pension at $637.1 billion, posted 14.8% net returns for the 12-month period ending June 30, 2026, while CalSTRS, its $415.4 billion counterpart in the state teachers' system, achieved 13.9% net returns. Both systems benefited materially from global equity strength. CalSTRS is actively expanding emerging market exposure through a partnership with active manager ABS Global, signaling continued confidence in non-U.S. equity growth trajectories.

The collective performance across these four major state plans underscores a strategic reorientation within institutional asset allocation, where international equity exposure—particularly in emerging markets—has become a material driver of pension fund returns. The outsized performance of emerging market and international small-cap holdings relative to domestic equities suggests that state pension fiduciaries' willingness to tolerate currency risk and geographic diversification is generating tangible alpha in the current market environment.