Retirement board hears Silvercrest on small‑cap struggles; consultant urges long view

The Oklahoma City Employee Retirement System heard a presentation April 10 from Silvercrest Asset Management about its small‑cap growth strategy, during which Silvercrest and the system's investment consultant described recent market volatility and urged patience while the fund reviews manager performance and overall portfolio diversification.

Silvercrest's client servicing lead, Jim Klaus, summarized the firm's approach and recent results, saying, "We are early investors in innovative growth companies." The system's investment consultant, identified in the meeting as Jason, reminded trustees that the board hired Silvercrest in November 2022 and said recent short‑term results reflect a difficult small‑cap market environment.

Why it matters: The retirement system's small‑ and mid‑cap allocation is an important return driver for the pension fund over multi‑year horizons. Trustees heard analysis showing short‑term underperformance for some small‑cap managers, but consultants and Silvercrest emphasized longer timeframes when assessing active managers and reiterated that portfolio diversification has helped offset volatility.

Silvercrest described its small‑cap growth mandate as focused on companies typically below $5 billion in market capitalization that can grow revenue and earnings rapidly. The firm noted personnel changes in its Milwaukee team and said it promoted internal analysts and hired replacements; it listed Roger Rama and Jeff Nevins as promoted and named new analysts Brandon Oak and Chad Cusser. Silvercrest told trustees the strategy has been volatile recently: the firm said small caps were down “close to 20% over the first 2 months” of the year and that the strategy experienced a first‑quarter decline of about 15% versus an 11% decline for the benchmark in the same period.

Klaus and Silvercrest staff also pointed to longer performance windows. They said the strategy has delivered stronger returns on 5‑ and 10‑year measures and that the mandate’s emphasis on earlier‑stage growth companies can produce large swings in short windows but may reward investors over multi‑year cycles. Silvercrest highlighted thematic positions—such as minimally invasive health care—and said those secular tailwinds underpin some holdings.

The system's investment consultant presented an "active‑vs‑passive" analysis across asset classes, showing that historically a meaningful share of small‑cap managers have outperformed net of fees, in contrast with large‑cap where active management has been more challenging. The consultant said the board should evaluate managers over multiple years and noted that the system will meet Earnest, the other small/SMID manager, at the next meeting.

Trustees were also briefed on portfolio diversification and near‑term performance: the consultant said private equity returns reported at March are benefiting from year‑end valuations (a reporting lag), that the plan held about 2% cash for operating needs, and that international developed and emerging markets had provided positive year‑to‑date returns through March to help offset U.S. equity weakness.

Votes at a glance: Trustees recorded routine approvals throughout the meeting, including: approval of the March 13, 2025 meeting minutes; consent docket; ratification of prior approvals; claims docket; multiple service‑retirement applications; continuation of pensions to spouses; authorization of a $5,000 death benefit payment and related administrative changes; approvals to terminate vested rights and commence retirement benefits; and approval of the investment consultant report. The transcript records motions, seconds, and that each item "is approved," but does not supply individual vote tallies.

The meeting ended after the investment consultant report and a brief comment period; Earnest is scheduled to present at the board's next meeting.