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SFERS Annual Report 2018

Published: June 30, 2018

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 2018, the investment portfolio returned 11.14%.

At the start of the fiscal year, the Retirement Board approved a revised asset allocation policy, driven by a 10% allocation to implement a new Private Credit Program. Additionally, under the authorization of the Retirement Board, and in line with the 2018 Annual Investment Plan, the investment team committed a total of $6.9 billion in new investments: $818 million in Private Equity, $663 million in the Real Assets portfolio, $4.2 billion in Absolute Return, $1.1 billion in Public Equity, and $100 million in private credit. 

The landscape of investing has significantly changed over the past few decades, and as a result of these developments, SFERS has sought to evolve in our asset allocation, strategy, manager selection, and management of risk. We have recruited a top team of investment professionals with deep research experience, increased the diversification of our asset allocation, strengthened our research process for manager selection, and implemented comprehensive risk management and investment research tools. The results have been encouraging. This year SFERS returns ranked in the top 5% compared to peers, and in the past three and five years, we have ranked in the top 3%.