San Bernardino County (Calif.) Employees’ Retirement Association committed €25 million ($28.5 million) to the Alcentra Strategic Credit Fund, said Donald Pierce, chief investment officer for the $8.2 billion pension fund, in an e-mail.
Alcentra Strategic Credit Fund is expected to buy securities senior in the capital structure — typically senior secured loans purchased at a discount to their intrinsic value with strong cash flow from banks that are looking to improve their capital adequacy test scores, a pension fund staff report shows.
The pension fund has invested with Alcentra in the past, including a $257.4 million separately managed account called the Alcentra Kneiff Tower.
Separately, the pension fund earned an annualized 4.6% in the fiscal year ended June 30, outperforming its benchmark by 40 basis points for the period.
“SBCERA benefited from strong private equity and private real estate returns, while international fixed income struggled,” Mr. Pierce wrote.
Portfolio returns for the fiscal year ranged from private equity and private real estate, with 11.2% and 10.4%, respectively, to -1.3% for international fixed income.
Longer term, the pension fund return was an annualized 10.5% for the three-year period, exceeding its 7.5% assumed rate of return, and an annualized 10.8% for the five-year period.