San Jose pension sees strong fiscal-year returns; private equity distributions pick up in Q4

The San Jose Police & Fire Retirement Board on its June meeting received an oral update from the chief investment officer and presentations from Neuberger Berman and Akita (Makita referenced in materials) on private markets performance and fund positioning.

The most immediate numbers came from the board’s CIO, Jay, who reported fiscal year‑to‑date estimated returns through early June of 7.8% for the pension plan and 8.1% for the health care trust. Jay said those estimates are “always estimates based on a combination of actual plan returns, and then index proxies,” and noted the board will see final fiscal‑year positions after quarter‑end reporting.

Board consultants and managers framed private markets activity for the board. Casey Boyer of Neuberger Berman told trustees that Series 1 of the plan’s private equity program has matured materially and produced realizations in Q4. “We’ve now returned back a little over 75,000,000,” Boyer said, adding that the plan received roughly $13 million in distributions in Q4 after much lower realizations earlier in 2024. He also said the portfolio has returned about $5 million so far in 2025.

Akita Investment Group’s presentation expanded on diversification across private debt, real assets, real estate and venture capital. Akita reported combined committed capital of about $2.6 billion for the private markets program and a remaining value near $1.25 billion as of Dec. 31, 2024, with an aggregate IRR of about 9.6% across the program. Akita also noted several fourth‑quarter commitments across strategies totaling roughly $84 million (funds cited included Silverpoint, Arbor Lane and Strategic Special) and new real‑assets commitments of about $30 million to Pelican Energy and Lime Rock.

Managers cautioned that private equity distributions have been muted relative to historical averages even as Q4 produced stronger closings. Boyer and Akita both said recent geopolitical and market volatility has slowed some disposition processes; Boyer referenced political volatility and Akita referred to uncertainty that paused some GP sale processes in March. Despite that, both managers said secondaries and co‑investments have been useful to generate earlier liquidity and attractive terms in the current environment.

The CIO also reminded trustees that July 1 will bring two operational changes: a modest reweighting within public equities to match previously approved strategic asset allocation tweaks, and plan sponsor pre‑funding of the employer Tier‑1 contribution of “just under 200,000,000.” Jay said part of that pre‑funding will be used to top up an “immunized net cash flow” account designed to hold projected benefit payments net of sponsor contributions for the next five years.

Board staff and consultants said more detailed, audited fiscal‑year and fee reports will arrive with the next round of performance materials later in the year. Trustees asked managers about the potential market effects of large secondary sales by other institutional investors; managers answered that secondary pricing is deal‑by‑deal and that fund valuation policies generally do not change solely because an LP sells an interest on the secondary market.

Next steps: the board will receive the formal quarter‑end performance reports and the annual fee report later in the cycle; managers said they expect more clarity on distributions in the second half of 2025 but described the outlook as “muted” relative to earlier expectations.