Investment Performance
Market Commentary – Quarter ended December 31, 2020


Global stocks in 2020 showed extreme resilience and ended the year at record highs despite historic levels of volatility and a global pandemic that threatened to stall an already slowing economy. The S&P 500 Index, the most widely watched equity market gauge, ended the year up more than 16 percent, an impressive rally of nearly 65 percent off of the March lows. The tech-heavy NASDAQ Index rose nearly 44 percent, a phenomenal gain for 2020.

OCERS’ total portfolio weathered the volatile and uncertain markets well, returning 11.38 percent for the 2020 calendar year, outperforming the policy benchmark return of 10.14 percent.  Led by advances in equities, OCERS’ public equity allocation returned just over 19 percent for the year, well above its broad global equity market benchmark of 16.25 percent.  Private equity performance also contributed to overall results, with a one year return of 16.15 percent, compared to a benchmark return of 12.62 percent.

Fixed income markets in 2020 did not provide the usual safe haven from volatility, but ultimately ended the year positively. In the first quarter, US corporate bonds underperformed US Treasuries by more than 11%, the most negative quarterly return difference in data going back a half century. However, by the end of the second quarter, US corporate bonds outperformed Treasuries by nearly 7.75 percent, which was the second-most positive quarter on record for corporates over Treasuries.  Despite the whipsawed markets, OCERS’ Core Fixed Income allocation returned over 9 percent for the year, above its custom benchmark. OCERS’ Corporate Credit strategies, including non-investment grade bonds, emerging markets debt, private credit and opportunistic credit, outperformed their respective benchmarks as well.

Overall 2020 was a year of records and history making for markets. The S&P 500 Index experienced its shortest recorded bear market in history, at just 33 days, followed by its third-fastest recovery to a breakeven level. The Index recovered from a nearly 30 percent drop to breakeven in about five months and ultimately ended the year beyond levels that most market strategists had forecasted. For OCERS, 2020 also highlighted the Investment Team’s consistent commitment to the Plan’s long-term asset allocation and investment approach and proved the benefits of diversification and the wisdom of staying the course even in the most challenging times. 

Going forward into 2021, market strategists widely expect continued easy monetary policy by the Federal Reserve, a new administration committed to aggressive fiscal stimulus, and expanding vaccine uptake leading to a reopening of the US economy.  While not all of this will necessarily translate into further asset price gains given the returns of the prior year, it does lay the foundation for accelerated economic activity in the near-term and a normalization to longer-term growth trajectories and return expectations

OCERS’ Total Fund (net of fees) return data as of December 31, 2020:

  1 Year 3 Year 5 Year 10 Year
Total Fund (net of fees) 11.38% 7.81% 9.26% 7.35%
Policy Benchmark 10.14% 7.58% 9.07% 7.69%