SDCERS’ Private Equity Portfolio Named Best Among Public Pension Plans Nationwide

 
Reuters PE Hub has named the San Diego City Employees’ Retirement System (SDCERS) as the best public pension plan in the country when it comes to the performance of its private equity portfolio. The online publication’s results follow a July 2014 survey of more than 160 public pension funds nationwide.
 
“The success of SDCERS’ private equity program can be attributed to the thoughtful way in which the program was constructed and the quality of the dialogue between staff and consultants. I am proud of our investments team and the Board of Administration, who work tirelessly to secure a retirement future for more than 20,000 members through an effective investment strategy focused on delivering long-term results,” stated SDCERS CEO Mark Hovey.

SDCERS’ private equity portfolio consists of 45 different funds, with commitments of $580 million. The survey noted 47 percent of SDCERS’ funds performed in the top 25 percent of all funds surveyed. The private equity program invests in all types of assets and strategies globally, including buyouts, special situations and venture capital funds.
 
The survey scored* both large and small public pension plans. The Los Angeles Water and Power Employee Retirement Plan represented a smaller plan because of its $138 million commitment to 15 private equity funds. The Indiana Public Retirement System represented a larger plan because of its $5 billion commitment to 247 public equity funds. The Missouri State Employee Retirement Plan was given the second best portfolio designation, followed by the Los Angeles Water and Power Employee Retirement Plan.
 
“The independent acknowledgement that SDCERS is performing exceptionally well demonstrates the great improvements made over the past decade,” said Council President Todd Gloria. “I commend SDCERS board members and staff for their ongoing focus on responsible investing.”
 
The private equity ranking comes during the same period pension system investment officers reported a preliminary 16.6 percent investment return (net of fees) for fiscal year 2014. SDCERS’ 16.6 percent net return compares favorably to the system’s actuarially assumed 7.25 percent return. As of June 30, 2014, SDCERS’ estimated three-year investment return was 9.9 percent, the five-year return was 13.3 percent, and the 10-year return was 7.7 percent. Returns over the past 25 years have averaged 9.4 percent annually. Final returns for FY 2014 will be released in the fall.
 
View the Reuters article “Which Public Pension is Best at Picking PE Funds” and corresponding presentation by clicking here. The corresponding presentation has also been attached in PDF format here.
 
SDCERS administers defined benefit plans for the City of San Diego, the San Diego Unified Port District, and the San Diego County Regional Airport Authority, and provides service retirement, disability retirement, death and survivor benefits to more than 20,000 members.
 
*The survey was conducted by Bison, a company that tracks private equity funds. Bison created a score for each fund based on performance. The Bison score for the portfolio is an average of each underlying fund’s score. Each fund gets a score that is calculated based on the percentile placement of the fund against the vintage year.