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SFERS Annual Report 2017

Published: June 30, 2017

The Retirement System’s investment objective is to maximize long-term rates of return on investments within prudent guidelines. 

The professional Investment Staff, supported by a group of professional consulting firms hired by the Retirement Board, analyzes, develops and recommends asset allocation mixes, manages investment portfolios, and monitors the activities and performance of external investment managers. For Fiscal Year 2017, the investment portfolio returned 13.81%. 

Under the authorization of the Retirement Board and in line with the 2017 Annual Investment Plan, the investment team committed a total of $3.2 billion in new investments: $855 million in Private Equity, $680 million in the Real Assets portfolio, $1.1 billion in Absolute Return, $200 million in Public Equity, and $367 million in fixed income. 

Over the past two years we have made important changes to our investment strategy, for both asset allocation and each asset class. Regarding asset allocation, we have reduced our exposure to longonly public equity and fixed income, increased our allocation to private equity and real assets, and adopted an allocation to absolute return. 

Regarding the asset classes, in fixed income, we reduced our exposure to credit and increased our exposure to high quality debt and private debt. In private equity, we have reduced our exposure to large cap buyouts and increased our allocation to country, regional, and sector specialists. In real assets, we broadened our exposure from a real estate focus to include natural resources.