The Butler County pension fund grew nearly 14 percent from 2011 to 2012 thanks in part to diversifying funds while reducing the investment risk.

The value of the fund, which is mostly in the form of investments, rose from $125 million to $144 million.

County Controller Jack McMillin, a retirement board member, said a shift from using active money managers to indexing played a significant part in the fund’s growth.

“We were the premier county in Pennsylvania in terms of pension fund returns,” McMillin said.

Commissioner Dale Pinkerton, who also is on the retirement board, agreed.

“We have done better than all the rest,” Pinkerton said.

As opposed to funds overseen by active managers who make riskier investments to outperform the average return, indexing adheres to the average, or benchmark, of each asset class.

McMillin said indexing also saves the county money in fees, dropping the amount from $1.2 million to $200,000 annually.

County Treasurer Diane Marburger, who is on the retirement board, said the current state of the market has caused active managers to become more desperate and take more risks that don’t result in sufficient gains.

“You’re paying more for less,” Marburger said.

She agreed with McMillin that saving money previously spent on fees was the route to take.

“The money is in the fund working,” Marburger said.

The retirement board earlier this year jettisoned its last active manager. In 2010, two others were dropped due to underperforming investments.

“We are now for all intents and purposes 100 percent indexed,” McMillin said.

Since the process began in 2010, the county stared reaping the rewards by 2012.

“It’s been a singularly great benefit to the fund and for future retirees,” McMillin said.

Commissioner Jim Eckstein supported the move.

“I concur with indexing,” Eckstein said. “It’s hard to beat that.”

The fund continues to grow. As of June 30, the value was more than $153 million.

McMillin credited Marburger for helping push for the change.

“It’s been her support with the understanding and cooperative spirit of the other three members of the retirement board,” he said, referring to the county commissioners.

Marburger said indexing was the county’s best option.

“You get what the market is offering,” she said.

Pinkerton lauded McMillin for closely following the market to ensure the county properly oversees the pension fund.

“He’s done a good job,” Pinkerton said.

Eckstein agreed: “I do give Jack credit for that.”

McMillin pointed out the upturn in the market also helped the fund.

Commissioner Bill McCarrier agreed with McMillin that indexing and improved market conditions boosted the fund.

“The market did so well,” McCarrier said.

McMillin reviewed the pension fund’s value as part of his office’s 2012 Comprehensive Annual Financial Report, which was recently released.

He said another boon to the fund is another move by the retirement board to sell longer duration bonds and acquire shorter duration bonds.

The retirement board in February discussed how rising interest rates will adversely impact the value of bonds with longer terms.

McMillin said the time to make that change was earlier this year.

“Now, there’s a stampede,” he said. “You don’t want to be the last one out.”

As of March 31, there were 787 county employees in the plan with 448 retirees or beneficiaries receiving monthly payments.

From January through March, the county paid an average monthly total of $564,947, or an average $1,261 per retiree or beneficiary.