The $70.4 billion LACERA also reported that the pension fund had annualized net returns of 8.5%, 8.1%, and 8.6% for the three, five, and 10 years ended June 30, respectively thus beating its respective benchmarks of 6.2%, 7% and 7.9%. .
In fact, LACERA was “materially ahead” of its custom benchmark on all timeframes, CIO Jonathan Grabel said at Wednesday’s board meeting. However, the assumed return on the pension fund is 7%.
The best performing asset class for the one-year period was property, plant and equipment and inflation hedges, with a net return of 14.3% compared to the benchmark’s 12.4%; followed by growth, -2% (-8.1% for the benchmark); credit, -4.2% (-7.5%); and risk mitigation and mitigation, -7.1% (-7.7%).
As of June 30, LACERA’s actual asset allocation was 50.2% growth, 19.9% risk mitigation and mitigation, 17.8% real assets and inflation hedges, 11.1% loans, and 1% overlays and hedges. LACERA’s target allocation is 51% growth, 21% risk reduction and mitigation, 17% real assets and inflation hedges, and 11% credit. There is no target allocation for its overlays and hedging strategy.
Separately, LACERA’s board was reinstated on Tuesday State Street Bank and Trust Co. for global custody and commercial banking services.
The pension fund retained incumbent State Street after a bidding process launched in January. State Street was the only respondent to the RFP.
The staff contacted three other global custodians, who said they declined to respond to the solicitation because they were unwilling to act as trustee, Jude Perez, chief investment officer, told the board at Wednesday’s meeting.