The Board of Retirement has exclusive control over and the fiduciary responsibility for the investment of SDCERA’s Trust Fund assets.
Trust Fund assets are allocated with a strategic, long-term perspective of the capital markets. The Board’s goal is to generate adequate long-term returns that, when combined with employer and employee contributions, will result in sufficient assets to pay SDCERA’s present and future obligations. The Trust Fund should seek to earn, on a long-term average basis, a rate of return that maximizes its return, subject to prudent risks under the prevailing circumstances, and is consistent with the level of risk and returns historically reflected in the actuarial investment return assumption.
SDCERA uses external investment management firms to implement the Board-approved asset allocation, and SDCERA’s investment staff does not directly manage financial assets or particular investment strategies. SDCERA’s Chief Investment Officer and investment staff recommend and oversee the investment vehicles and managers.
Active management will be employed when, for each asset class, it can be expected to earn a net-of-fee return above an investible, passive benchmark. Paying investment management fees is acceptable provided that the fees are transparent and measurably add value over a low-cost, passive investment.
SDCERA retains a General Consultant, Aon Hewitt Investment Consulting, to serve as an independent expert on investment policy and asset allocation. They also provide risk return metrics and measurements, investment manager analysis and overall investment management support.