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Pension Funds

San Diego County drops Townsend Group, reports 12% fiscal-year return

San Diego Interstate 5 south highway sign with sunrise sky.

San Diego County Employees Retirement Association's board terminated real estate consultant Townsend Group to streamline its roster of consultants and save money, confirmed Mary Montgomery, spokeswoman for the $11.4 billion pension fund.

Albourne Partners, which had consulted on the pension fund's hedge fund portfolio before the fund eliminated the asset class in 2015, and general investment consultant Aon Hewitt Investment Consulting will provide real estate consulting services, said a memo to the board recommending Townsend's termination by Stephen Sexauer, chief investment officer.

The realignment of consulting services is expected to save SDCERA $280,000 per year, the memo stated.

Separately, SDCERA reported its investment net one-year return of 12% for the fiscal year ended June 30 boosted the pension fund's assets to an all-time high. It returned a net 1.1% the previous fiscal year.

SDCERA's estimated annualized return for the three years ended June 30 is 4.9%, its five-year return is 7.1% and its 10-year return is 4.4%. By comparison, SDCERA's benchmark returns for the one-, three-, five- and 10-year periods ended June 30 are 12.5%, 4.7%, 6.9% and 5.1%, respectively.

SDCERA's best-performing asset class for the one-year period was emerging markets equity with 23.2% net return. The benchmark for is the MSCI Emerging Markets IMI, which had a one-year return of 22.8% before fees.

The lowest returning asset class for the one-year period was fixed income, at 1.6% net of fees. The benchmark for fixed income is the Bloomberg Barclays U.S. Intermediate Aggregate index, which had a one-year return of -0.2% before fees.

SDCERA's asset allocation was 45% total equities; 24% fixed income; 23% total private assets, which includes real estate, private equity and real assets; and 8% alternative beta/opportunistic/other.