Investments

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Current Portfolio

As of September 30, 2019

Asset Class Market Value Actual Target
Global Public Equity $6,286,808,615 37.5% 35.0%
Private Equity $1,699,717,151 10.1% 10.0%
Fixed Income $2,787,348,746 16.6% 17.0%
Credit $1,756,281,244 10.5% 11.0%
Real Assets $2,265,437,123 13.5% 17.0%
Risk Mitigation $1,669,136,514 10.0% 10.0%
Cash $288,991,196 1.7% 0.0%
Total Assets* $16,754,799,247 100.0% 100.0%

*Total Assets include $1,078,658 of strategies that are winding down.

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Investment Performance

As of October 31, 2019

October was a positive month for equity markets, with the S&P 500 setting a new all-time high in the month with a gain just over 2.0%. The move to the upside was primarily driven by positive developments towards a U.S.-China trade deal and overall better than expected economic data and corporate earnings. Albeit the latter on previously lowered expectations. Even though there have been signs of a slowdown in manufacturing and business investment, U.S. GDP growth came in better than expected as well. The overall positive GDP growth was likely largely due to relatively consumer spending, a large component of the measurement, continuing to offer support, as well as further monetary stimulus from the Federal Reserve in the form of another 25 basis point rate cut. The third and likely last rate cut for the intermediate term.

For the month of October, the S&P 500 was up roughly 2.2 percent and the Russell 3000 was up just over 2.6 percent. This year has seen increased volatility with the market vacillating between positive and negative sentiment from one month to the next. As investors seemed to shift back towards embracing cautious optimism in October, risk and credit assets achieved additional gains for the year. Global investment grade corporate credit delivered a nearly 1.2 percent return for the month and government bonds returns were flat as yields slightly increased.

Looking forward, more signs of slowing global growth may ultimately fatigue investor optimism. Concerns will mount if the slowing, which has been mostly confined to trade-based and manufacturing sectors, begins to spread to broader parts of the economy. The US consumer, who has been a stabilizing factor, will continue to be key and need to be closely monitored. In September, U.S. consumer credit grew at the slowest rate in 15 months and Consumer Spending increased only marginally. In October, we additionally saw Consumer Confidence fall slightly on the month and wage growth stall.

To some this raises question of whether the U.S. economy can stand and grow on its own as other regions globally continue to slow and the Federal Reserve taking a neutral position at the same time the consumer might be offering less support for the economy going forward.

What follows is OCERS’ Total Fund (net of fees) return data as of September 30, 2019:

  1 Year 3 Year 5 Year 10 Year
Total Fund (net of fees) 5.3% 8.0% 6.2% 7.2%
Policy Benchmark 6.3% 7.8% 6.5% 7.8%