Wednesday, September 20, 2017
Monthly Investment Portfolio Report
At its regular meeting held on September 19, 2017, the Investment Committee received an update about OCERSí preliminary fund performance as of August 31, 2017. OCERSí fund recorded a 9.5 percent positive return (net of fees) through the first eight months of 2017, while the trailing one-year return was 12.0 percent.
The growth in equity was a significant driver of OCERSí returns during the trailing one-year span. International equity saw an increase of 20.3 percent over the trailing year, while U.S. equity recorded a 15.9 percent increase.
Other areas that saw significant gains over the trailing one-year span were emerging market equity (with a 27.6 percent increase) and private equity (with a 13.7 percent return).
Looking over the longer period, OCERSí return over the trailing three-year period was 5.4 percent; the trailing five-year period was 7.5 percent, and the trailing 10-year period was 5.3 percent).
As of August 31, 2017, OCERSí total fund was at an all-time high of $14.73 billion.
The Investment Committee approved a series of recommendations as part of a credit asset allocation review at the September 19 meeting.
1. Adopt the Credit sub-asset class allocation targets and ranges
2. Consolidate Loomis Sayles Strategic Alpha and Loomis Sayles High Yield strategies, modifying guidelines to be more high yield-focused
3. Reclassify assets from riskier direct lending strategies to private equity
4. Redeem PIMCO DiSCO II
5. Reclassify BlackRock Orange DisloCredit into Real Assets
6. Trim assets from Pictet and BlueBay (Emerging Market Debt) to move towards target allocation
PIMCO DiSCO II has been a strong performing fund for OCERS. The System originally invested $75 million in DiSCO II in May 2012. OCERSí DiSCO II portfolio is now valued at $149.5 million as of August 31, 2017, representing a 13.8 percent annualized return since inception.
In January 2017, the Investment Committee voted to adopt a new asset allocation. In March 2017, the Committee adopted the target ranges around each asset class. The recommendations approved by the Investment Committee are a continuation of the implementation of the 2017 asset allocation that is underway this year.
To see OCERS' asset allocation as of August 31, 2017, click here.
The next regular Board of Retirement meeting will be held at 9 a.m. on Monday, October 16, 2017. The next Investment Committee meeting will be held at 9 a.m. on Wednesday, October 25, 2017.