SBCERA PE portfolio beats index in Q2

The $9.19bn pension plan’s total fund gross quarterly returns missed its benchmark by 0.1 percent.

The San Bernardino County Employees’ Retirement Association’s private equity bucket, which includes private credit commitments, returned 7 percent gross for the second quarter, according to documents for Thursday’s meeting.

The Southern California pension fund’s return for the three months ending 30 June beat its benchmarks for the Cambridge Associates Global All Private Equity, which lags by one quarter and posted a quarterly gross return of 3.8 percent. SBCERA also posted a 9.3 percent return for the first half of the year, a figure that beat the year-to-date Cambridge index’s gross 6.7 percent return by 2.6 percent. 

The private equity portfolio, for which the public retirement plan set a 16 percent allocation, posted one- and three-year gross returns of 15.7 percent and 11.2 percent, respectively. Five-year gross returns stood at 13.1 percent, while 10-year gross returns were 8.5 percent. Only the decade-long time frame posted returns below the benchmark, at 0.4 percent under.

Of its 12 distressed fund investments, the 2010-vintage Apollo PCPL Web VIII posted the highest net internal rate of return at 46.47 percent, while Tennenbaum Opportunities Fund V posted the lowest at 5.61 percent. (All net IRR figures are calculated since the fund’s inception.)

For its three commitments to mezzanine vehicles, the 2012-vintage BNY Mellon – Alcentra Mezzanine III produced the highest net IRR at 12.47 percent, while the TCW/Crescent Mezzanine IV posted the lowest at 2.85 percent.

Two Ares investments, the European Loan Opportunity Fund and Special Situations Fund IV, both 2015 vintage vehicles, posted net IRRs of negative 6.02 percent and negative 18.77 percent. However, industry practitioners generally begin looking at returns three years following a vehicle’s vintage year.

The pension fund as a whole posted gross returns of 2.6 percent for the quarter, barely missing its 2.7 percent benchmark, but year-to-date gross returns came in at 6.2 percent, meeting the fund index.

One- and three-year gross returns were 13.7 percent and 5.7 percent, respectively. SBCERA’s gross returns over five years was 8.8 percent and 10 years was 4.3 percent.