SDCERA increases max Oaktree commitment to $700m

The Southern California pension plan authorised the increase to a mandate it has had for over two decades. 

The San Diego County Employees Retirement Association (SDCERA) board voted this month to possibly double its current allocation with Oaktree Capital Management.

The board of trustees voted unanimously on 19 January to increase the pension’s current investment of $350 million to as much as $700 million, the monthly meeting materials show.

The board tasked the fund’s staff with the decision on whether or not to up its current commitment to the Los Angeles-based behemoth.  

The fund’s first investment is in Oaktree’s core high yield bond portfolio, which was initiated in 1995.

The $350 million in additional call capital will be available to invest “when the opportunity exists to earn above average returns in high yield bonds and/or other marketable securities strategies”, according to the investor presentation.

The newly increased mandate will target a 7.25 percent net internal rate of return, which will be measured on a three-year basis. The pension plan’s current high yield bond investment showed a return rate of 12.3 percent from the beginning of last year through 30 November, the presentation shows.

SDCERA declined to comment further, while Oaktree did not respond to a media request.

SDCERA has also made commitments to the Apollo Credit Opportunity Fund III ($100 million) and the Torchlight Debt Opportunity Fund V ($20 million), according to PDI data.

The pension fund administers the retirement and associated benefits for current and former employees of the County of San Diego. It listed a total of $10.9 billion in assets as of 30 June, according to its annual report.