Investment Performance
Market Commentary – Quarter ended September 30, 2022


Global equities registered negative returns during the third quarter despite an early rally, which gave way to a drawdown that started in mid-August and intensified in September. Investors’ sentiment turned bearish as global policy makers continued to raise rates to fight elevated inflation. This pushed the year-to-September equity returns into bear market territory. US stocks meaningfully outperformed the rest of the world as the S&P 500 posted a third quarter return of -4.9%. Developed markets equities were down -9.9% while emerging markets generated a return of -11.6%.

The Federal Reserve raised rates by 75 bps in September and this brought the increases in interest rates since the start of the year to a total of 3.0%. Bond yields rose sharply and the yield curve remained inverted. Bond returns suffered and the third quarter capped off one of the worst starts to a calendar year for fixed income. US treasuries declined -4.5% while investment grade and high yield corporate bonds lost -4.7% and -0.65%, respectively. Emerging markets debt returned -4.7%, making it one of the worst performing fixed income sectors this year.  

The Bloomberg Commodity Index declined -4.1% during the third quarter. Oil prices appreciated early in the quarter due to supply constraints but ended the period down a significant -26%. In addition, industrial and precious metals posted negative returns. Prices within the agriculture commodities sub-component were mixed, which resulted in a slight negative return.

As of September 30, 2022, OCERS portfolio had a market value of $ 19.9 billion, down from $ 20.9 billion at the end of the second quarter. OCERS’ portfolio generated a quarterly return of -3.4% relative to the policy benchmark return of -4.0%. For the trailing one-year period, OCERS’ portfolio generated -7.0% relative to the Policy Index return of -9.2%. This placed OCERS in the top 13% best performing pension plans in its peer group.

  3 Month 1 Year 3 Year 5 Year 10 Year
Total Fund (net of fees) -3.4% -7.0% 6.2% 6.0% 6.7%
Policy Benchmark -4.0% -9.1% 5.2% 5.6% 6.8%