San Diego City Employees' Retirement System's board on Friday committed $30 million to the Waterton Residential Property Venture XIV.
The fund is expected to make value-added multifamily real estate investments across the U.S, according to a staff memo to the board. The fund will target a net internal rate of return of 12% to 13%, the memo said. Waterton is a new manager relationship for the pension plan. SDCERS' real estate consultant The Townsend Group assisted.
Separately, the board voted to maintain its U.S. equity portfolio's target allocation to the S&P 500 index at 16% and continue to invest the approximately $284 million portfolio in the BlackRock S&P 500 Index Fund. In March 2020, the board adopted a new U.S. equity manager structure, terminating a $76.9 million structured alpha strategy and temporarily investing the money in BlackRock's S&P 500 strategy. In the interim, SDCERS considered other options, including investing the portfolio in an active strategy. However, staff recommended maintaining the passive strategy "to avoid paying higher fees for market ... returns," Anders Norrman, a SDCERS investment officer and head of public markets, told the board. He suggested employing active strategies for investments where the market is less efficient.
General investment consultant Aon assisted.
The board also rehired incumbent Macias, Gini & O'Connell to provide independent financial audit services, following an RFP issued in September.