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Board affirms strategic asset allocation after Maketa presents 10/20‑year capital market expectations
Summary
After a detailed presentation of capital market expectations and scenario analysis by Maketa (presenter Laura Wyrick), the San Jose Federated Retirement Board debated shifting modestly toward fixed income but ultimately voted to retain the existing strategic allocation.
San Jose — The San Jose Federated City Employees Retirement System board heard a detailed presentation from Maketa Investment Group on long‑term capital market expectations and scenario analyses, then voted to maintain the plan’s existing strategic asset allocation.
The presentation by Laura Wyrick explained Maketa’s 10‑ and 20‑year forward return assumptions, model inputs (IMF, World Bank, Bloomberg and other year‑end data) and scenario/stress testing. Maketa showed the pension fund’s current functional allocation (growth, low‑beta, other) and two alternative allocations: one slightly heavier in fixed income and one that reweights public equity to MSCI ACWI weights. Wyrick summarized that a small increase in fixed income would lower portfolio standard deviation marginally while leaving long‑term expected return broadly similar.
Board discussion focused on two tradeoffs: whether to accept slightly lower expected long‑term return in exchange for lower volatility and whether the plan’s public and private equity exposure should be reweighted geographically (the plan is overweight emerging markets relative to MSCI ACWI). Trustees discussed implementation issues, passive vs. active implementation, and the difficulty of timing markets. The CIO and other trustees said they would consider tactical adjustments after any major market drawdown and reaffirmed a process to call the Investment Committee (IC) if a large correction occurs.
Vote and outcome: Vice Chair Chandra moved and Trustee Linder seconded a motion to maintain the existing strategic allocation. The motion passed by roll‑call vote (ayes recorded: Vice Chair Chandra; Trustees Vasti/Abbott/Faulkner/Linder; Chair Horowitz).
Why it matters: Strategic asset allocation determines long‑term risk and return for the plan and underpins actuarial assumptions that affect employer contributions and the funded status. Trustees emphasized a long horizon (20+ years) and cautioned against tactical reweighting absent a clear structural reason to change.
Speakers (selected): Laura Wyrick (Maketa Investment Group); CIO (investment staff); Vice Chair Chandra; Trustees Faulkner, Linder, Abbott; Chair Horowitz.
