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Mendocino County retirement fund posts strong 2025 returns; board advances real‑estate funding
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Summary
Callan told the Mendocino County Board of Retirement that the fund delivered strong 2025 returns, with a robust fourth quarter and active managers adding excess return; trustees heard plans to rebalance and move additional money into Cain and LaSalle real‑estate commitments.
Callan, the board’s investment consultant, told trustees the retirement fund finished 2025 with strong absolute and relative returns, driven by a “very strong fourth quarter” across equities, fixed income and real assets. The consultant said diversification and active manager selection contributed to the plan’s outperformance versus peers.
The presentation showed the plan’s market value at roughly $855–$856 million at year‑end 2025, with the allocation near policy targets: about 37% domestic equity, 25% international equity, 20% fixed income, roughly 7% infrastructure and 8% real estate. Callan highlighted that international markets and emerging markets materially outperformed U.S. equities in 2025 and that fixed income benefited from higher coupon income after prior rate increases.
Staff and Callan outlined recent portfolio activity tied to new real‑estate commitments. Trustees were told February activity included moving cash out of Reef to help fund a Cain real‑estate allocation; staff reported $8.6 million had already been funded to Cain and that the board plans to scale Cain to about $30–31 million over time while gradually increasing allocations to LaSalle as other positions are closed. Staff cautioned that fully closing or reallocating existing manager positions could take months to more than a year.
Callan and staff detailed manager performance across asset classes. Domestic equity implementation remains heavily passive for large cap exposure, while active managers in mid and small cap, international and fixed income contributed positive manager effects. Fixed income managers such as Dodge & Cox and PIMCO were cited for strong relative performance driven by security selection and positioning.
Trustees asked questions about drivers of fixed‑income gains and about ranking methodology for peer comparisons; staff confirmed reported manager performance and rankings are net of fees. The board did not take formal action on allocations at the meeting but received direction to continue the rebalancing process and to report future funding activity in quarterly updates.
The board will see continued updates on funding cadence for Cain and LaSalle in monthly and quarterly reports as staff completes the rebalancing and transitions between managers.
