The Los Angeles County Employees Retirement Association reported a net return of 6.4% for the fiscal year that ended June 30, beating its benchmark’s 5.0% return and raising its total market value to approximately $73.57 billion from $70.41 billion one year earlier.
The pension fund reported three-, five- and 10-year annualized returns of 10.1%, 7.6% and 8.1%, respectively, outperforming its benchmark’s returns of 7.2%, 6.5% and 7.3%, respectively, over the same time periods.
As of the end of June, the pension fund’s asset allocation was 53% growth, 19% risk reduction and mitigation, 16% real assets and inflation hedges, 11% credit and 1% overlays and hedges.
LACERA’s returns were buoyed by its growth assets, which returned 10.2% and topped its benchmark’s 8.0% return. Meanwhile, its credit investments returned 7.7% for the year, outperforming the benchmark’s return of 6.0%.
Real assets and inflation hedges returned just 0.1% but still came out ahead of the benchmark, which lost 0.6% during the year, while risk reduction and mitigation assets lost 0.2%, falling short of the benchmark, which broke even. Overlays and hedges investments returned 51.6% for the year but account for less than 1% of the overall portfolio.
“The last 12 months have been marked by significant volatility in capital markets, geopolitical issues, and policy shifts,” LACERA CIO Jonathan Grabel wrote in a newsletter to the pension fund’s retired members. “The ramifications of increasing interest rates reverberated through the financial systems. However, the first half of calendar year 2023 saw the steady increase in both equity and fixed income markets, further adding to the fund’s positive performance.”