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Retirement board approves $375 million private‑markets pacing plan
Summary
The San Jose Police and Fire Retirement Board approved an annual private‑markets pacing plan that calls for $375 million in commitments and outlines a theoretical 150% pacing cap that would allow up to $563 million in a single fiscal year.
The San Jose Police and Fire Retirement Board on May 1 approved an annual private‑markets pacing plan that sets the board’s target commitments for the coming fiscal year at $375,000,000.
Dinesh, a presenter for the board’s investment staff, told trustees the pacing plan models 10‑year projections for five private‑market sub‑asset classes and was unanimously approved by the Investment Committee the prior month. Dinesh said the plan is a guideline to reach the board‑approved strategic asset allocation and noted private markets are illiquid, meaning fund managers control capital calls and distributions.
The board’s chief investment presenter said fiscal‑year‑to‑date performance through two days prior to the meeting showed the pension plan up 4.2% and the healthcare trust up 4.5%, figures staff said they would double‑check. He said private debt commitments in the current pacing plan are running at about 140% of the single‑year pacing target because two private‑debt funds liquidated earlier than expected and returned capital sooner than modeled, creating redeployment opportunities.
Why it matters: the pacing plan guides how much the board commits annually to illiquid private investments so the portfolio moves toward strategic targets while maintaining vintage‑year diversification. Staff told trustees the plan includes a convention in the investment policy and implementation procedures that limits single‑year commitments to 150% of that year’s pacing plan plus any prior undercommitments; at the extreme, that theoretical cap could permit up to $563,000,000 of commitments in a fiscal year.
Board members asked questions about the relationship between commitment amounts and the board’s strategic asset allocation (SAA). Dinesh said the SAA is measured as a percentage of plan assets, whereas the pacing plan is commitment‑based; overcommitment in one year would typically result in lower commitments in future pacing plans as a balancing mechanism.
The motion to approve the plan was made by Trustee Ashwar and seconded (second not specified in the record). The chair called the question and trustees voted to approve the pacing plan (motion passed).
The approval authorizes staff to proceed with commitments consistent with the modeling in the presentation; staff reiterated the plan is revisited annually and the consultants — Neuberger Berman for buyouts and Makeda Investment Group for other private strategies — provided the projected cash‑flow and net‑asset‑value models.
Looking ahead, staff said they expect to be able to fully deploy the pacing plan in the upcoming fiscal year if market opportunities unfold as modeled, and that liquidity modeling shows expected positive net cash flows across upcoming fiscal years as distributions from existing investments are forecast to exceed capital calls.
Provenance: discussion and presentation began with the investment pacing presentation by Dinesh and ended with the motion and vote approving the plan.
