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Merced County Employees allocates $10 million to real estate

Pension fund announces 9.2% net return for fiscal year

Merced County (Calif.) Employees' Retirement Association made two new real estate commitments totaling $10 million, said Kristen Santos, retirement plan administrator, in an email.

The $821 million pension fund committed $5 million each to AG Realty Value Fund X, a value-added real estate fund managed by Angelo, Gordon & Co., and Carmel Partners Investment Fund VII, a real estate fund that targets investments in U.S. multifamily value properties. Both are first-time commitments for the pension fund to these managers, Ms. Santos said.

Separately, the pension fund announced a preliminary net return of 9.2% for the fiscal year ended June 30, 90 basis points above its benchmark. The pension fund returned an annualized net 7.1% and 8.2%, respectively, for the three and five years ended June 30, below their respective benchmarks of 7.4% and 8.4%. For the 10 years ended June 30, the pension fund returned an annualized gross 6.4%. Ten-year net returns were not available.

The pension fund returned a net 12.5% in the fiscal year ended June 30, 2017.

The best-performing asset class was private equity, which returned a gross 20.9% in the fiscal year ended June 30. Net returns for alternatives will be available after the pension fund's Sept. 27 board meeting. Other gross alternatives returns were private infrastructure, 16%; private real estate, 10.8%; and hedge funds and private natural resources, 8.4% each.

Among asset classes with net return information, domestic equities returned a net 16%, 80 basis points above its benchmark of 15.2%; followed by international equities at a net 7.8%, equaling its benchmark; and domestic fixed income at a net 0.2%, 40 basis points below its benchmark of 0.6%.

As of June 30, the actual allocation was 29.4% domestic equities, 20.8% domestic fixed income, 16.8% international equities, 7.5% private real estate, 7.3% emerging markets equities, 5.9% real assets, 5.6% hedge funds, 4.6% private equity and 2.1% cash.