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San Jose Federated board delegates venture-capital manager selection to staff, asks for 1% transaction control in policies
Summary
The San Jose Federated City Employees Retirement System Board voted to delegate authority to staff to select venture-capital managers, aligning its practice with the Police & Fire plan. Trustees asked staff to codify a 1% per-transaction control in policies or pacing plans and to continue confidential reporting to the Investment Committee.
San Jose — The San Jose Federated City Employees Retirement System Board voted in February 2025 to delegate to staff the authority to commit money to venture-capital managers, amending the investment policy statement and the Investment Committee charter to permit the change.
The change — moved to mirror a delegation the Police & Fire board already uses — passed by roll-call vote with all trustees present voting “aye.” Board members said the delegation is intended to streamline manager selections while retaining the board’s strategic oversight and existing checks such as IC concurrence memos and consultant reviews.
Board members and consultants framed the investment policy statement (IPS) as a strategic guide and said more-detailed limits and procedures should live outside the IPS in staff policies, pacing plans and IC review. Eileen (consultant) summarized the group’s view: “The IPS is a road map. It is, a document which articulates the board’s decision making process at a strategic level as well as the broad roles and responsibilities.”
Trustees raised concentration concerns for a small, illiquid asset class. Dinesh (staff) reviewed the delegation’s existing transaction limits for private assets: a first commitment to a new manager is limited to 2% of plan, follow-on commitments to existing managers to 3%, and secondary investments to 1%. Trustees asked staff to add a venture-capital–specific control so a single manager would not consume an outsized share of the 4% allocation the board intends for the asset class. Board members and consultants discussed using a 1% per-transaction limit for venture capital and agreed staff would draft policy/procedures language for a future meeting.
Board members and staff also clarified reporting and confidentiality: private-market memos will continue to be circulated confidentially to the Investment Committee and to trustees on request, and quarterly public updates will show the asset-class aggregates without disclosing confidential deal-level details.
Clarifying details recorded during the meeting include a plan-size figure of roughly $3,000,000,000 and a target venture-capital allocation of about 4% of plan assets. Participants noted that 1% of plan currently equates approximately to $30 million and 2% to about $60 million, figures the CIO and staff used to illustrate potential transaction sizes.
Trustees directed staff and counsel to (a) implement the delegation by approving language in the IPS and Investment Committee charter now and (b) return with formal staff policies and procedures that include a per-transaction control (the board asked staff to pursue a 1% limit for venture-capital transactions) and other operational safeguards. Staff and the board said these policies will be reviewed by the IC and returned to the board for formal acceptance in a future meeting.
The board’s actions align Federated’s treatment of venture capital with the Police & Fire plan and aim to preserve committee-level review while reducing the need for the full board to review every confidential private-markets investment.
