The Associated Press

PORTLAND - Driven by gains from real estate and buyout firms, the Oregon Public Employees Retirement Fund returned 13.48 percent in 2005.

Pension managers said that was better than 92 percent of public pension funds with assets of more than $10 billion.

Gross returns in the last quarter were 3.66 percent, keeping the Oregon portfolio in the top tenth of funds in that category in terms of performance, according to the Trust Universe Comparison Service, the most widely used benchmarking service for pension funds.

The fund is the single biggest pool of state investment money. It is the source of retirement benefits from the Public Employees Retirement System, which has been the subject of debate and legislation in recent years because returns had fallen.

Long term, pension managers are up against an 8 percent annual yardstick. Funds for older retirees, which make up the bulk of the active money in the fund, were guaranteed an 8 percent return, regardless of the fund's performance.

The gains in real estate and private equity drove overall returns in the fund's regular account, which is about $53 billion in public employees' pension money. The private equity is money invested with buyout firms such as Kohlberg Kravis Roberts & Co. and Texas Pacific Group.

Managers of the fund benchmark its performance against a variety of market indexes. In 2005, returns from Oregon's real estate and private equity investments beat their indexes by 13.5 percentage points and 25.8 percentage points, respectively, according to Ron Schmitz, the fund's chief investment officer.

Returns also were strong in domestic and international equities and bonds.

"Right now, it seems like the wind is at our backs in every asset class," Schmitz said. "It's the best of all worlds."