Investments
Investments
OCERS is among the nation’s 100 largest public pension funds, with the Investment Committee overseeing the system’s diverse portfolio. The combination of employee and employer contributions and the earnings from OCERS’ investments give the retirement system the ability to pay our members the retirement benefits that they’ve earned.
Current Portfolio
As of September 30, 2020
| Asset Class | Market Value | Actual | Target |
|---|---|---|---|
| Global Public Equity | $7,403,520,585 | 41.73% | 47.0% |
| Private Equity | $1,959,977,307 | 11.05% | 13.0% |
| Fixed Income | $2,813,018,566 | 15.86% | 11.0% |
| Credit | $1,450,538,728 | 8.18% | 7.0% |
| Real Assets | $2,100,297,789 | 11.84% | 12.0% |
| Risk Mitigation | $1,731,655,192 | 9.76% | 10.0% |
| Unique Strategy | $2,238,882 | 0.01% | 0.0% |
| Cash | $279,343,449 | 1.57% | 0.0% |
| Total Assets* | $17,741,146,728 | 100.0% | 100.0% |
*Total Assets include $556,230 of strategies that are winding down.
Investment Performance
Market Commentary – Quarter ended September 30, 2020
Global stocks continued their broad-based recovery from the historic March declines to rebound for the second quarter in a row. Almost all asset categories posted positive returns through the quarter. The S&P 500 Index reached an all-time high before September brought renewed volatility and the first negative month since March. In particular, large cap technology stocks, that had been key drivers of market returns through the recovery, saw a correction of more than 10 percent. Despite the market rollercoaster, the quarter still ended in the positive. The S&P 500 Index is now up almost 50 percent from the March lows.
OCERS’ equity allocation returned roughly 9 percent over the quarter, which was in line with its broad US equity market benchmark as measured by the Russell 3000 Index. The total portfolio continued to water volatile and uncertain markets well, returning nearly 5 percent for the quarter.
Most fixed income asset classes also saw moderate positive performance on the quarter as defensive investments such as Treasuries and other fixed income asset classes continue to be among the top performers in a historically volatile year. High-yield bonds were the top performers among fixed income for the quarter, while Treasuries and investment-grade corporates saw smaller gains.
After the historically sharp, but short recession in the first quarter, most major economies now appear to be in an early-cycle recovery. However, looking forward some uncertainties and risks remain. Permanent layoffs have risen and unemployment continues to remain high overall while some parts of the U.S. enter a second ‘lockdown’ period due to rising COVID-19 cases. On the positive side, recent news related to potential vaccines has been very encouraging and the uncertainty surrounding the U.S. presidential election has generally abated. With this, markets seem to have created a sigh of relief as they have rallied into the fourth quarter of the year.
OCERS’ Total Fund (net of fees) return data as of September 30, 2020:
| 1 Year | 3 Year | 5 Year | 10 Year | |
|---|---|---|---|---|
| Total Fund (net of fees) | 5.61% | 5.72% | 7.67% | 6.87% |
| Policy Benchmark | 6.32% | 6.48% | 8.10% | 7.47% |
As of September 30, 2020, OCERS’ plan assets stood at approximately $17.4 billion. Overall portfolio liquidity remains sufficient to cover expected benefits obligations, and the OCERS’ Investment Team continues to monitor the current market environment for potential near-term risks and new opportunities to help the portfolio achieve its long-term investment goals.