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El Paso retirement trust posts fiscal‑year‑to‑date 8.1% return; trustees approve $10 million rebalancing into cash
Summary
Kellen LLC reported a fiscal‑year‑to‑date return estimate of 8.1% through June, driven by public markets and a rebounding private equity program. Trustees approved a $10 million rebalancing—moving ACWI ex‑U.S. index exposure into the cash account to meet near‑term needs.
Kellen LLC presented the trust’s monthly investment performance through June 2025 and trustees approved an asset rebalancing plan to raise cash for near‑term needs during the City of El Paso Employees Retirement Trust meeting on July 16.
Kellen reported a fiscal‑year‑to‑date estimated return of about 8.1% through June, exceeding the trust’s actuarial discount rate target of 7.25%. The firm said strong market returns—particularly in U.S. equities and a recovery in private equity valuations—drove the improvement since the first quarter, when the trust’s fiscal‑year‑to‑date return was roughly 0.49%.
Kellen highlighted several portfolio drivers: private equity has grown to roughly 17.5% of the portfolio and is contributing meaningfully as older vintage funds distribute capital; the trust’s international equity allocation benefited from a weaker U.S. dollar (raising U.S.‑dollar returns versus local‑currency returns); and small and mid‑cap domestic equities lagged due to higher interest‑rate sensitivity and tariff exposure. Kellen noted that private equity pacing and distributions will affect future capital calls and rebalancing decisions.
Following the report, the investment committee recommended a short‑term rebalancing: transfer units from the ACWI ex‑U.S. index (one of the Mellon‑managed funds discussed earlier) into the trust’s cash account to provide liquidity for benefit payments and potential private equity capital calls over the next three months. The proposal was to move $10,000,000 into cash.
A motion to approve the asset rebalancing plan was made and seconded. The board polled individually and the motion passed unanimously. Recorded votes (as read at the meeting) were: Miss Valdez — Aye; Miss Pascala — Aye; Mister Kerr — Aye; Miss Hamlin — Aye; Mister Repkis — Aye; Mister Pena — Aye; Representative Scott Canales — Aye; Representative Piero — Aye. The motion was announced as passed.
Trust staff and Kellen noted the overweight position in private equity and said the rebalancing source (ACWI ex‑U.S. index) was chosen because it best addressed the current liquidity need given existing weightings. Trustees asked Kellen and staff to continue reporting currency effects separately for international allocations and to revisit pacing assumptions for private equity as distributions and calls evolve.
The board recorded the approval of the rebalancing plan; staff will implement the $10 million transfer into the cash account and monitor liquidity needs before the next scheduled rebalancing review.
