San Diego City Employees’ Retirement System is revising its investment policy statement to treat private equity and infrastructure as a single asset class with a target allocation of 13%, an action summary for the $6.9 billion pension fund administrative board shows.
In October, SDCERS investment committee voted to combine private equity and infrastructure “from an operational and back-office perspective,” the executive summary of consultant Aon Hewitt Investment Consulting’s asset allocation review states. On July 10, the board opted to combine the 10% private equity target allocation and 3% infrastructure target allocation. It also adopted an annualized 10% rate of return as the benchmark for the combined portfolio. The private equity benchmark had been an annualized 10% and the infrastructure benchmark, the consumer price index plus 3% annually.
These changes create a “high performance hurdle and aligns advisers’ interests with SDCERS,” Aon’s report states. No changes were made to SDCERS’ asset allocation.
SDCERS has $520.3 million invested in private equity and $113.7 million in infrastructure.