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Retirement System trustees accept investment report; fund about $505 million after quarter of market volatility
Summary
The Government Employees Retirement System Board of Trustees on April 24 heard an investment presentation from advisers at Makita and staff, accepted the investment report by a 5-0 vote with one absent, and reviewed local-asset performance, cash flows and a planned limited restart of the retiree loan program.
On April 24, 2025, the Government Employees Retirement System Board of Trustees accepted the investment report following a presentation by Makita investment advisers and system staff, voting 5-0 with one trustee absent.
The board heard a quarterly markets briefing from Makita (presenters identified in the meeting as Leo and Sean) that summarized performance through March 31, 2025: U.S. equities posted losses for the quarter while many overseas stocks and most fixed-income sectors posted gains. Makita noted increased market volatility in recent weeks and said the dollar’s decline boosted returns on foreign equities when measured in U.S. dollars. “The objective of the fund is to make over 6% per year on average over a period in excess of 10 or 20 years,” Leo of Makita said during the presentation.
Trustees were told the system’s strategic allocation changed last year to reduce U.S. equity exposure by 10 percentage points and shift that weight into fixed income; the advisers and staff said that move and earlier reallocation since late 2022 have helped limit downside when U.S. stocks underperformed. Makita and staff reported the board’s approximate target allocation as: U.S. equities about 35%; equities overseas about 20% (roughly 15% developed, 5% emerging); high-quality bonds about 20%; Treasury inflation-protected securities (TIPS) about 10%; and high-yield bonds about 10%. Alternatives and private-market positions are minimal (under 1% currently and in liquidation).
System staff reported a March 2025 market value of approximately $505 million, which includes local assets such as the Haven Site Mall and the loan portfolio. Staff said the fund used about $19.5 million in March to replenish cash for benefit payments, drawing from the MSCI EFA index ($8.5 million), the U.S. aggregate bond index ($6 million) and U.S. TIPS ($5 million). Fees for investment management were characterized as very low—about three basis points (roughly $100,000) for the period discussed—and fiscal-year-to-date fees of roughly $224,000 were reported.
Staff and advisers reviewed private-market vintage results the system still holds: a 2006 vintage private equity commitment of $14.7 million that has returned about 26.7 million to date and a 2009 vintage with $9.5 million invested that has returned about 19.5 million to date; remaining valuations for those funds were described as modest and the funds are in liquidation. Trustees were told private markets are unlikely to be a near-term funding source because of liquidity needs tied to benefit payments.
Administrator and operations staff also reported on local-asset performance and operations. The Haven Site Mall was described as performing well year to date and a recent appraisal value cited in the meeting placed the mall at about $58 million, an increase of roughly $17 million compared with the prior appraisal cited in the presentation. Staff said a limited restart of the retiree loan program is in test and expected to begin early summer with a public notice in May.
The board moved to accept the investment report and later accepted the March 21, 2025 minutes and the consent agenda; each motion passed unanimously among trustees present. The meeting adjourned to an executive session on matters described on the record as relating to financial, legal or personnel matters.
Votes at a glance: - Motion to accept the investment report: Passed, vote recorded as 5 yes, 0 no, 1 absent. (Mover: Trustee Tom Clark; second: not specified in the record.) - Motion to accept minutes of 03/21/2025: Passed, vote recorded as 5 yes, 0 no, 1 absent. - Motion to adopt consent agenda/administrative support items: Passed, vote recorded as 5 yes, 0 no, 1 absent. - Motion to go into executive session: Passed (moved and seconded on the record), roll called for attendance before closing.
The presentation and discussion emphasized the board’s multi-decade investment horizon, the recent tactical reduction in U.S. equity exposure, and the role of local, income-producing assets and the loan portfolio in supporting liquidity and returns. Trustees asked about potential future asset-allocation shifts and were told staff and advisers will revisit allocation at the next in-person meeting in July and review annually.
