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Retirement board reviews private-market gains and approves modest asset-allocation tweak
Summary
The San Jose Police and Fire Retirement Board heard private markets and total-fund performance updates from managers and consultants, then voted to adopt a modest change to public-equity geographic weights that staff said aligns total public+private exposure with a global benchmark.
The San Jose Police and Fire Retirement Board received a quarterly investment briefing and approved a narrow adjustment to the system's strategic asset allocation on a vote at its meeting.
The board heard performance updates from Neuberger Berman, Makeda Investment Group and staff covering private equity, private debt, real assets, real estate and venture capital. Hassan Soleja, vice president at Neuberger Berman, presented results for the partnership with the plan and said the legacy 2017 series had produced a net IRR of about 18 percent and a 1.8x TVPI through Sept. 30, while a newer series closed in July 2023 remained early in its life and had not yet produced meaningful distributions.
The presentation from Makeda (presented by Laura Wyrick and Colin Kowalski) showed private-market asset classes with long-term IRRs generally above public-market equivalents, while noting venture capital remains immature in the plan and private markets are heavily weighted toward U.S. and developed-market exposures. Staff said the pension plan's total-fund calendar-year return for 2024 was about 8.6 percent and that the Healthcare Trust posted an 8.1 percent one‑year return.
Why it matters: board members said they wanted to preserve long-term growth while managing volatility and implementation costs. The investment committee and staff framed the decision as a strategic — not tactical — change intended to better reflect the plan's combined public- and private-market geographic exposure.
After discussion, Trustee Esawar moved to adopt the right-most allocation shown on the presentation (a modest shift in public-equity regional weights that staff described as aligning the combined public+private equity exposure more closely with a global market benchmark adjusted for private-market U.S bias); Trustee Sunita seconded. The motion carried with one recorded dissent. The chair said staff would implement the allocation using normal rebalancing mechanisms and could phase changes to limit trading costs.
Board and staff emphasized implementation caveats: transition and trading costs, manager availability for any active changes, and the difficulty of precise forecasting for 10‑ and 20‑year capital market expectations. Staff noted the option to implement changes incrementally and to use scheduled cash flows — including anticipated sponsor prefunding — to reduce market impact. Trustee discussion included arguments for keeping the plan's risk exposure steady to avoid repeatedly reducing risk after recent market declines.
Quotes (selected): "I would say in more recent times, there's been less LP-led secondaries, but there's more continuation vehicle secondaries where it's GP led," Hassan Soleja said when explaining secondary-market dynamics. Laura Wyrick said the private markets program is "very much still early in their life" for newer vintages and that geographic concentration is skewed to developed markets and the U.S.
The board asked staff to prepare follow-up rebalancing plans and to return if markets moved materially in the near term.
