When Renee Ostrander took over as CEO of the San Joaquin County Employees' Retirement Association in March of last year, she only had to travel about 50 miles from her old employer, the California Public Employees' Retirement System.
However, that journey included leaving the mammoth $533.4 billion pension fund where she spent nearly three decades, mostly recently as chief of the employer account management division, to join a much smaller pension fund of about $4.7 billion in assets.
Ostrander, who was appointed SJCERA's CEO upon the retirement of Johanna Shick, said leaving CalPERS was initially a “tough decision.”
“Working at CalPERS for many years, it was woven into the fabric of my life,” she said. “My (career) started as a part-time state of California employee in the early 1990s, and soon after, I joined CalPERS. It wasn’t until a few years ago that I really started to contemplate what I wanted the pinnacle of my career to look like. I knew my heart and passion was in public pensions; many of my family members made the commitment of full careers to public service and are now living a secure retirement. I knew if I considered any opportunities outside of CalPERS, it would have to be in that world.”
Ostrander said she had close colleagues who encouraged her to consider a leadership or an administrator role with a county system. As such, San Joaquin County was the “perfect fit” and she decided to relocate to Stockton, Calif., from Sacramento.
“It was an organization with a solid foundation ready to take advantage of new opportunities, with the bonus of being geographically close to our family’s hometown,” she noted.
Having a smaller team at SJCERA means she and her team have the ability to work closely together. She works with the board, the investment officer, Trent Kaeslin and their investment consultants at Meketa “as a team to achieve our goals.”
SJCERA, she explained, looks for investments "that have a successful track record and are in alignment with our strategic asset allocation and our pacing plan."
While there is a significant amount of collaboration and due diligence occurring between Ostrander, the investment officer, the consultants, and the board of retirement, she notes that the board is ultimately “responsible for our investment decisions.”
In contrast to SJCERA’s modest size, CalPERS has more than 2,800 employees, including a senior investment team of 11 people, each with their own asset class expertise.
Ostrander’s long tenure at CalPERS has helped to shape how she operates at SJCERA now, she said.
“I was fortunate to be able to experience many roles during my time at CalPERS by looking for opportunities that built on what experience I had already acquired,” she said. “I gained experience in the financial area, managed administrative functions, participated on the pension system replacement team, and spent many years overseeing several program areas. With that experience, I was able to understand the (relationships) across the organization. I had the opportunity to not just see it work on a larger scale but be a part of it and ultimately then bring that education and skill set to SJCERA.”
"CalPERS (comprises) thousands of employees with hundreds on the leadership team,” she said. “Trying to make a change (at CalPERS), understandably so, takes time and coordination of effort amongst many (parties). Because we are small here at SJCERA, we can consider changes and move immediately.” Ostrander explained that by "change" at CalPERS, she referred to changes in culture at the pension fund.
Indeed, when she first arrived at SJCERA, she spent time with each employee, getting to know about them, their backgrounds, their families, and their career ambitions.
“I have worked to build collaborative teams, worked to build strong relationships with our stakeholders and the board,” she said. “As I approach my one-year anniversary and look back, the team is very engaged and (very focused) on the success of SJCERA.”
Uncertain landscape
Looking out at 2025, Ostrander sees a lot of uncertainties in the investment landscape.
“Some of the bigger topics include understanding the new federal administration’s policies and its impact on the economy, ongoing global conflicts and their impact, the increasing use of (artificial intelligence), and what seems like the never-ending rise of inflation,” she elaborated. “Like many other pension plans, we are also dealing with the high valuations in the U.S. equity markets.”
Ostrander said that there is not any one policy of Trump that she is focused on but rather that she and her team now have an overall “heightened awareness” of what is happening with the new administration.
Indeed, Trump has already enacted a plethora of new policies, including higher tariffs against major trading partners, mass layoffs of government workers, orders seeking to dismantle DEI initiatives in federal government, among others.
“We’re seeing changes happen at the federal level, and those changes could impact the market and/or investing behaviors,” she said. “We will continue to watch and be thoughtful about evaluating whether these changes are creating a short-term volatility or a long-term shift. For now, we are committed to our current strategic asset allocation.”
With respect to AI, Ostrander thinks there is a large opportunity for pension plans and corporations in terms of data collection, namely AI’s ability to “consume large amounts of data and ferret out correlations that weren’t before seen or understood because of the sheer volume of data and work required.” But the biggest risk with AI, she added, has to do the use of such generated data without sufficient human oversight.
Challenging PE environment
SJCERA returned a net 8.5% for calendar 2024, below its benchmark of 11.4%.
Ostrander noted that SJCERA’s investment program strives to outperform its 6.75% assumed rate of return on a yearly basis.
“In 2024, we accomplished that goal,” she said. “Our second objective is to outperform our policy benchmark which we did not accomplish in 2024. This is largely due to the challenging returns facing private equity investments relative to our public market (assets).”
With respect to the portfolio’s private equity exposure, Ostrander said “over the long-term, private equity is expected to provide a better return than public (equities). However, comparing one to the other on a single-year basis, that won’t always be the case. This is why we have built a more all-weather portfolio that protects our assets in the times of distress and helps minimize the financial impact of negative markets. We have found that keeping our focus on the long-term helps avoid some of the pitfalls of trying to time the market over a given year.”
SJCERA uses a functional framework to categorize their investments. “We have two broad categories: broad growth and diversifying (growth),” she said.
As of Sept. 30, 2024, the pension fund had an actual allocation of 76.1% to “broad growth” assets (78% target); 19.9% to diversified growth (22% target); and 4% in cash (zero).
Within the broad growth category, the fund had an actual allocation of 40.1% to traditional growth assets, comprised of domestic and international equity (with a 34% target); 25.7% to stabilized growth assets, comprised of core real estate, liquid credit and private credit (32%); and 10.3% to aggressive growth assets, which includes private equity, value-add real estate and opportunistic real estate. (12%).
Within the diversified growth category, the fund had an actual allocation of 10.3% to crisis risk offset assets, which includes long U.S. Treasuries and other safe-haven assets that are expected to perform well during times of economic uncertainty (14% target) and 9.6% to principal protection assets such as investment-grade bonds (8%).
