Highlights

2024 PHOTO COMPETITION IS OPEN - SUBMIT YOUR PHOTOS BY MONDAY, SEPTEMBER 2

PRELIMINARY INVESTMENT RESULTS FOR FISCAL YEAR END JUNE 2024: PORTFOLIO RETURNS 8.73%

INVESTMENTS 101: INVESTMENT BENCHMARKS

2024 PHOTO COMPETITION IS OPEN - SUBMIT YOUR PHOTOS BY MONDAY, SEPTEMBER 2

SBCERS invites you to participate in the 3rd Annual Photo Competition! Winning entries will be printed and hung throughout the SBCERS Lobby and meeting spaces and used in future communications.

We hope our gallery reflects the varied perspectives and passions of our membership, be it the natural beauty you discover on a walk through your neighborhood, the thrilling sites and scenes you discover in your travels, and everything in between! 

Suggested themes include, but are not limited to:

• Architecture
• Landscape
• Events
• Abstracts
• Black and White

Important dates and details:

• Multiple submissions are allowed.
• JPEG and PNG files only. File size limit is 16 MB.
• Monday September 2, 2024: Deadline for submissions.
• Monday, September 9, 2024: Winning entries announced via email notice to each winning entrant, and announced to www.sbcers.org.
• October 2024: Winning entries will be printed to wrapped canvas (sizes may vary from 16” x 20” to 18” x 24”) and hung within the SBCERS gallery at Robin Hill Road. Photos will be unveiled at the SBCERS Open Enrollment Fair.
• Any entry may be used for print and digital SBCERS communications.

PRELIMINARY INVESTMENT RESULTS FOR FISCAL YEAR END JUNE 2024: PORTFOLIO RETURNS 8.73%

We are pleased to announce the preliminary financial results for the fiscal year ending June 30, 2024. The SBCERS portfolio has demonstrated robust performance across most asset classes, ensuring continued retirement security for our members. 

The total fund returned 8.73% for the fiscal year, reflecting positive absolute performance in all but one asset class. The fund's market value increased a net gain of $353.3 million to reach a total market value of $4.42 billion. 

U.S. Equities experienced the greatest returns at 20.34%, followed by Developed International equities and Emerging Markets international equities which returned 14.83% and 13.19% respectively. Commercial real estate was the only asset class posting negative returns for the fiscal year. 

Exceeding the 7.0% assumed rate of return - calculated by actuarial consultants and adopted by the Board of Retirement - is a key objective of the fund. It ensures the fund has sufficient assets to pay out pensions to retirees and their beneficiaries. Gains in excess of the assumed rate also provide a buffer against future economic downturns or market volatility as the fund continues to amortize losses from the great financial crisis and make progress towards full funding. 

"SBCERS remains committed to managing the financial future of our employed and retired members with care and transparency," said CEO Greg Levin. "Our investment strategy is designed to balance risk and return, aiming to secure the long-term financial health of our fund. We are proud of the progress made and will continue to work diligently to enhance our risk adjusted investment performance."

Click here or on the image above to view the preliminary report.

* Please note that returns from private asset classes have a six-month lag. The final total fund performance used in actuarial valuations is subject to change as audited fair market valuations are received for non-publicly traded assets. Final performance calculations are planned to be completed in October 2024 and made available in the audited Annual Comprehensive Financial Report for the fiscal year ending June 30, 2024. 

INVESTMENTS 101: INVESTMENT BENCHMARKS

What is an investment benchmark?

An investment benchmark represents the performance of a group of investments in the same asset category (e.g. equities, fixed income). Benchmarks provide a reference point that can be used to gauge whether a portfolio is performing as expected, considering the investment type, duration, and risk level of the investments in the portfolio.

When using a benchmark to evaluate the performance of a portfolio, the benchmark should be relevant, measurable, transparent, and comprehensive. For instance, selecting a stock benchmark for a bond portfolio wouldn't provide useful insights into the portfolio's performance. 

How does SBCERS use benchmarks?

SBCERS uses benchmarks to analyze performance over a long period of time—usually looking at 3-, 5-, and 10-year performance—as opposed to a quarter or even a year. Short-term comparisons may not provide accurate analysis due to anomalies that may not have relevance to the long-term performance of a given portfolio. 

Three main benchmarks are employed to assess whether the portfolio is meeting its objectives: Total Fund, Asset Class, and Sector benchmarks.

• At the Total Fund level, SBCERS uses a custom benchmark called "the Policy Benchmark." SBCERS Policy Benchmark is calculated using multiple underlying benchmarks that are weighted to System’s target allocations for each asset class and sector. Some of the benchmarks used in the construction of SBCERS Policy Benchmark include the Russell 1000, Russell 2000 and the Bloomberg US Aggregate Bond Index.
• Asset Class benchmarks are used to evaluate the performance of individual asset class like U.S. Stocks, Foreign Stocks, U.S. Bonds, and Foreign Bonds. Each asset class has a single benchmark representing the performance of investments within that category.
• Sector benchmarks provide a more detailed analysis, which further divide investments into specific categories. For example, within U.S. Stocks, sectors could be divided between Large Cap and Small Cap stocks based on dividends.

From Page 7 of the preliminary monthly performance report:

Using benchmarks to analyze the performance of private asset classes such as private equity, private real return (natural resources and infrastructure), and private real estate is more challenging. Private assets are by their nature not traded on public exchanges, meaning relevant daily market pricing data is not readily available for comparison. Furthermore, private market valuations are subject to management estimates and are validated using audits of corporate financial statements. As a result, valuations of the assets themselves are completed less frequently. 

For these reasons, private assets are often compared against a “public market equivalent” (PME) benchmark (e.g. Russell 3000 plus 3%) which attempts to quantify the excess return over a public market that an investor expects to return for taking on the additional risk inherent in a private asset. PME benchmarks are often lagged to take into account the delay in the valuation process for private assets. Finally, complex portfolios with a variety of underlying security types with similar investment objectives are often measured against custom benchmarks which are developed using a variety of underlying indicators and weighted based on the composition of the assets in the underlying portfolio. 

In short, investment benchmarks help you see if your money is working as hard for you as similar investments. You can find SBCERS investment performance compared to benchmarks in the monthly report by consultant RVK, Inc. that is linked in SBCERS email newsletters. You can also find quarterly reports at https://www.sbcers.org/resources/investment-reports/.