SDCERS' Preliminary 2012 Investment Returns Are 0.3%

Date: Aug 14, 2012


The San Diego City Employees’ Retirement System reported preliminary investment returns of 0.3% for the fiscal year ending June 30, 2012.  The figure will be updated following receipt of private market performance data for the system’s real estate and private equity holdings.

“Fiscal year 2012 continued to experience high levels of market volatility.  The Eurozone debt crisis deepened, causing international equities to predictably perform much worse than the U.S. market,” said Liza Crisafi, SDCERS’ Chief Investment Officer. International equity returns, up 31% in FY2011, were negative 14.1% in FY2012. 

SDCERS’ bias towards small capitalization stocks, which outpaced large capitalization stocks by nearly seven percentage points in FY2011, was out of favor this year and underperformed large cap stocks by an offsetting amount in FY2012.  Additionally, while SDCERS has transitioned nearly 50% of its equity holdings to passively managed index funds, the remaining actively management funds underperformed in FY2012. These two factors also contributed to underperforming the system’s benchmark of 1.4%. 

Stronger returns were realized in other assets classes.  U.S. Fixed Income holdings were up 7.1%, Emerging Market Debt returns were up 5.6%, and preliminary real estate returns were 6.4%. Private equity returns, when finalized, are also expected to be positive for the year.

Mark Hovey, SDCERS’ Chief Executive Officer, noted that the system remains focused on sound long-term investment strategies.  “On an annualized basis, SDCERS returns over 10 years and 20+ years are 7.2%, and 8.9%, respectively.”


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