San Diego County Pension Returns 9.6% in Fiscal 2023

The San Diego County Employees Retirement Association reported a 9.6% investment return for the fiscal year that ended June 30, just beating its benchmark’s 9.4% return and raising its asset value to $15.85 billion from $14.56 billion one year earlier.

Over three years, the retirement system’s portfolio reported an annualized return of 7.5%, edging its benchmark’s 7.4% return, and over five- and 10-year spans, it reported annualized returns of 5.8% and 6.0%, respectively, falling short of its benchmark, which returned 6.0% and 6.6%, respectively, over the same periods. Since the SDCERA’s trust fund’s inception, it has returned 9.3% annualized. Comparable returns since inception for its benchmark were not available.

Public equities were the top-performing asset class for the pension fund for the year, returning 16.9% and beating the benchmark return of 16.1%. Total public assets earned 11.3%, matching the benchmark performance, while its “opportunistic” portfolio returned 10.1% for the year, missing its benchmark by 100 basis points.

Total fixed-income assets gained 2.2%, ahead of the benchmark’s 1.7% return, while total private assets returned 0.3%, compared with the benchmark’s return of 1.6%. Real estate assets remained flat for the year but easily beat their benchmark, which lost 10.7%; however, private equity lost 6.0%, well off its benchmark’s return of 16.1% for the year. Private real assets returned 13.0%, falling short of the benchmark’s return of 16.1%, while private debt lost 2.3%, compared with its benchmark’s return of 11.1%.

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The SDCERA portfolio’s asset allocation is 27.9% in U.S. equity, 19.4% in risk-reducing fixed income, 12.1% in international equity, 8.3% in real estate, 8.0% in global equity, 7.4% in return-seeking fixed income, 6.3% in “opportunistic” assets, 4.9% in emerging market equity, 3.0% in private equity, 2.2% in private real assets and 1.0% in private debt.

For the quarter that ended June 30, SDCERA reported a 3.0% return, compared with a 3.4% gain for its benchmark. U.S. equity was the top-performing asset class for the quarter, returning 8.3% and matching its benchmark, followed by global equity, which earned 6.0% and just edged out its benchmark’s 5.9% return. The worst-performing asset classes for the quarter were real estate, which lost 4.4%, compared with its benchmark’s loss of 2.9%, and private debt, which lost 3.0% as compared with its benchmark’s 3.9% gain.