The Royal County of Berkshire Pension Fund delivered a return of 0.5% for the year to 31 March compared with 10.2% for the previous year, according to its recently published accounts.
This takes its annualised return to 4.8% over the past three years, from 8.7% for each of the three years to 31 March 2015.
However, the fund said its investment return in real terms was -0.1% over the year to the end of March 2016 and 4% over the three years to that date, meeting its medium-term 4% real return target.
The size of its portfolio, at £1.7bn (€2bn), was barely changed from its value the year before.
The vast majority of assets are held via funds.
Berkshire said the main underperformers during 2015-16 were emerging market equities and commodities managers, while absolute return strategies run by Grosvenor Capital Management also fell short of their absolute return target.
During 2015-16, Berkshire redeemed its holding in a global developed markets equity fund run by IPM with a fundamental indexation strategy, which failed to meet objectives over the medium term.
The pension fund also reduced exposure to commodities and absolute return holdings.
Meanwhile, it increased exposure to other private debt and private equity funds – for example, in new emerging market infrastructure, UK middle-market infrastructure, hedge fund secondaries opportunities and other private market investments in the UK, such as the private rented sector, private debt and technology.
As of the end of March, 44.6% of the fund was invested in global equities, 14.3% in bonds, 17.4% in absolute return funds and 11.1% in property.
Infrastructure made up 4.7% of the portfolio.
Over the longer term, Berkshire is planning to increase this allocation to a maximum 15% of its portfolio and is joining the £1bn infrastructure platform to be set up by the Local Pensions Partnership and the Northern Pool.
It also wishes to retain certain locally focused investments, such as housing schemes, permanently outside the pool.