Investments

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Current Portfolio

As of June 30, 2020

Asset Class Market Value Actual Target
Global Public Equity $6,435,117,620 37.7% 35.0%
Private Equity $1,799,439,791 10.6% 10.0%
Fixed Income $2,972,104,368 17.4% 17.0%
Credit $1,600,539,314 9.4% 11.0%
Real Assets $2,093,371,988 12.3% 17.0%
Risk Mitigation $1,721,129,459 10.1% 10.0%
Unique Strategy $2,080,684 0.0% 0.0%
Cash $429,909,844 2.5% 0.0%
Total Assets* $17,054,284,111 100.0% 100.0%

*Total Assets include $591,042 of strategies that are winding down.

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Investment Performance
Market Commentary – Quarter ended June 30, 2020

While the first quarter of 2020 closed as one of the most volatile and challenging periods on record, the second quarter saw a reversal of much of the volatility and market dynamics experienced during that historic first quarter period. Risk assets responded to the abundant availability of liquidity and expectations for a rapid recovery as many economies around the globe began to reopen following a broad global shutdown.

The broad US equity market, as measured by the Russell 3000 Index, saw the greatest rebound and outperformed non-US developed markets and emerging markets, returning just over 22 percent for the quarter. OCERS’ equity allocation returned roughly 22.5 percent over the period and the total portfolio continued to weather volatile and uncertain markets well, returning nearly 6.5 percent for the quarter.

The positive market performance and improved jobs and consumer-related data continued to offer many market participants hope for a broader recovery throughout the quarter. However, while retail sales rebounded and weekly claims for unemployment abated from April to May, hopes for a broader recovery waned as the trend of new Covid-19 cases accelerated rapidly into the end of June, dashing hopes of a full reopening of economies and a return to ‘normal’.

Looking forward, near-term uncertainly around the path of the Corona virus and the outcome of the 2020 U.S. Presidential election will likely continue to invite periods of heightened volatility. This is in addition to the usual increase in volatility often seen in the last two quarters of the year. As daily infection rates in many parts of US continued to trend higher throughout most of July, prompting some economies to close again, further questions have begun to arise around recovery and potential macro risks. U.S. GDP for the second quarter fell by an annualized rate of 32.9% compared with the previous quarter and was the largest decline in GDP since World War II. However, supportive measures have been put in place by governments and the Fed to avoid the macro shocks experienced earlier in the year. These seemingly remain on standby and have quelled concerns for many market participants. For the time being, this has allowed markets to stabilize and move higher as investors seem to have found comfort that the measures in place should help weather what we feel is a likely a protracted recovery period, which is also almost certain to present a few surprises along the way.

What follows is OCERS’ Total Fund (net of fees) return data as of June 30, 2020:

  1 Year 3 Year 5 Year 10 Year
Total Fund (net of fees) 1.64% 5.24% 5.55% 7.22%
Policy Benchmark 1.81% 5.63% 6.16% 7.67%

As of June 30, 2020, OCERS’ plan assets stood at approximately $17.1 billion. One-year total plan performance as of the end of the quarter was 1.6 percent net of fees. Longer-term performance numbers remained strong with the plan returning 5.2, 5.6 and 7.2 percent over the respective three-, five- and ten-year time horizons. Overall portfolio liquidity remains sufficient to cover expected benefits obligations, while the Investment Team continues to monitor the current market environment for potential near-term risks at the same time as also seeking out potential new opportunities to help the portfolio achieve its long-term investment goals.