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Fund reports: pension plan up year‑to‑date; private markets show positive PME performance amid slower exit environment
Summary
Investment staff reported fiscal‑year‑to‑date gains for the pension and healthcare trust; Neuberger Berman and staff presented private equity and private markets updates showing distributions and persistent slow exit activity, while total fund performance for 2024 remained strong overall.
San Jose — At the March meeting, retirement system staff and external managers presented performance updates for the pension and health care trust and private markets programs.
Key figures: The CIO reported that, through the most recent reporting date, the Federated pension plan was up 3.94% fiscal‑year‑to‑date and the health care trust was up 4.82% (staff presentation numbers). The total pension fund market value and quarterly returns were reviewed by staff; the fund’s one‑year and five‑year returns remain positive relative to many benchmarks, with private markets cited as a strong contributor to long‑term performance.
Private equity and private markets: Casey Boyer of Neuberger Berman reviewed the private equity (series 1 and 2) portfolios, noting Q3–Q4 valuation movements, distributions and that series 1 (mature) is producing distributions while series 2 is newer and committing capital. Staff noted a generally slower exit environment across alternatives, but the plan saw meaningful distributions in Q4 and early 2025 from co‑investments and secondary positions. A staff private markets report showed most private markets programs outperforming a public markets equivalent (PME) over the long term, with venture capital still immature and a small program relative to policy target.
Discussion topics: Trustees asked about real estate composition (limited office exposure, heavier industrial and multifamily allocation, and newer data center investments) and manager implementation. Staff and consultants noted implementation choices had led the plan’s emerging markets equity exposure to be larger than ACWI weights once private assets were included; trustees discussed whether to alter geographic weights or implement changes gradually.
Healthcare trust: Staff reported the health care trust’s assets and that it has performed above median over multi‑year periods but is more sensitive in down markets due to its higher equity tilt.
What happens next: Staff will continue manager monitoring, review implementation of public equity geographic weights at the IC in April, and continue to send regular performance reports to the board.
Speakers (selected): CIO (investment staff); Casey Boyer (Neuberger Berman); Laura Wyrick (Maketa — earlier CMA context); trustee questions from Linder, Faulkner and others.
