Investment consultant reports strong returns for Oklahoma City retirement fund, recommends no strategic allocation changes

Jason Polis, an investment consultant with ACG, told trustees of the Oklahoma City Employee Retirement System on Feb. 12 that the fund’s recent performance was “very strong,” driven by non-U.S. and emerging-market equity returns and a weaker dollar.

Polis presented condensed monthly and quarterly excerpts and an annual asset-allocation review, saying emerging markets posted nearly a 43% one-year return and non-U.S. equities rose about 31% through January, while U.S. large-cap returned roughly 16% over the same period. He said currency weakness contributed materially to international returns.

Polis explained that active management was challenged in 2025—small-cap value managers, for example, saw only about 20% of managers outperform the benchmark last year—but that active strategies still add value in some non-U.S. asset classes and in fixed income because of index construction. "It's been a unique period," he said, noting dispersion across managers and asset classes.

On private markets, Polis said capital-market assumptions now imply private equity should return materially more than public markets over a 10-year horizon and stated the firm’s midpoint assumption for private equity is about 10% on a 10-year basis. He cautioned that private equity is different from public-market returns and carries illiquidity risk.

Polis described cash-management actions the board has taken: the fund raised about $15,000,000 in cash to meet the next quarter’s benefit and capital-call needs, taking roughly $9,000,000 from large-cap holdings and $6,000,000 from small cap. He said monthly benefit payments run about $4,300,000 and that the fund targets raising roughly a quarter’s worth of cash to meet payments and expected capital calls.

Looking forward, Polis presented 10‑year median expected returns for asset classes and said the portfolio’s median expected return over the next decade is in the mid‑6% to high‑7% range (the presentation cited a median around 6.6% and a policy-target median of about 7.5%), while trustees’ required return remains 7%. He emphasized volatility’s effect on long‑term returns and warned trustees there is roughly a 1-in-4 chance the portfolio could be flat to negative in any given year: "about a 23% probability in any given year that this portfolio could be flat to negative."

Polis concluded the presentation by recommending no strategic changes to the fund’s target allocation at this time, noting that the current mix is reasonable given the system’s long time horizon, liquidity needs and objectives. After trustee discussion the chair moved to receive the reports; the motion passed.

Next procedural step: the board formally received the three consultant reports and there was no immediate recommendation to alter the strategic allocation.