SDCERS' Final Investment Return for Fiscal Year 2019

Date: Sep 20, 2019


At the September Board meeting, SDCERS’ Investments Team reported a final return of 7% (net of fees) for Fiscal Year 2019. As of June 30, 2019, the trust fund’s assets totaled $8.4 billion, reflecting a net increase of $370 million over the past year. SDCERS’ average rate of return over the past 20 years is 7.3%, and since its inception is 8.9%.
There are a few ways to measure an investment portfolio’s performance – after all, 7% is great if the market averaged only a 3% return for example, but 7% isn’t so good if the market averaged 10-15%. One way we measure our performance is by comparing our actual rate of return to the actuarial rate of return, which is the expected earnings rate determined by SDCERS’ actuary and used to calculate things like contribution rates. We are happy to report that our 7% return beat our actuarial rate of return of 6.5%, which indicates SDCERS is maintaining its long-term investment strategy to ensure the continued payment of promised pension benefits to its members.
Another way to measure performance is by comparing our returns to a market benchmark, which is basically how the market did if its asset allocations were invested proportionate to SDCERS’ portfolio. Unfortunately, we did not beat our market benchmark of 7.6%; this is primarily due to relative underperformance from our private equity investments.*
Finally, when SDCERS’ rate of return for FY 2019 is compared to a peer group of other pension plans, SDCERS experienced higher returns than 81% of the 395 other plans in our peer group! We are pleased to share with you the accomplishments of our talented Investments Team.

*This underperformance was due to lower allocations of venture capital and buyouts, which were the top performing sectors during the one-year period, and a significant amount invested in primary funds, which experienced the J Curve (loss of value) in the first year of investing.

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