Investment Update
March 22, 2023
In recent months, during a time of global economic stress, our long-term strategy has shown resilience.
SBCERA earned a 2.7% return on investments for the 12-month period that ended January 2023. (The 2.7% is “net of fees,” which means that we’ve already subtracted all costs associated with the investment—like management or transaction expenses.)
We also strongly outperformed our policy index by 5.0%. The policy index is a benchmarking tool that compares SBCERA’s portfolio to a broadly diversified global stock and bond portfolio. The index helps us monitor and evaluate the effectiveness of the fund’s overall asset allocation and investment implementation.
Rising interest rates have shaken the stock market and other aspects of our economy. But this has also generated investment opportunities in credit markets that SBCERA is well positioned to take advantage of. Since interest rates began climbing in 2021, SBCERA’s short duration credit portfolio yield has nearly doubled, jumping from 4.3% to 7.9% ($6.3 billion).
It’s important to remember that although investment returns are a sign of overall health for the SBCERA fund, your benefits are not tied to these returns—no matter what the economic climate brings. As we continue to navigate a time of global economic stress, our proactive approach will help ensure we meet our commitment in delivering lifelong benefits our members have earned through their years of public service.
Over the last 10 years, we have earned an 8.8% annualized return with 30% less volatility than our peers, and over the last 40 years, we’ve earned an average annual return of more than 8%, a period which includes numerous recessions and other economic disruptions.
While our fund is not immune to short-term volatility, our investment strategy is built to minimize volatility and maximize investment returns so we can continue providing retirement security to our members now and well into the future.
You can learn more about SBCERA’s Investments by visiting our website at https://www.SBCERA.org/investments.