FROM: Don Pierce, Chief Investment Officer
SUBJECT: Calendar Year (CY) 2026 Investment Manager Due Diligence Schedule and Exception List
RECOMMENDATION:
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Approve the CY 2026 Investment Manager Due Diligence Schedule and Exception List.
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BACKGROUND:
Staff has prepared a proposed CY 2026 Investment Manager Due Diligence Schedule in accordance with SBCERA’s Due Diligence Policy (the Policy). The Policy requires on-site or remote investment due diligence for all managers at least once every three (3) years:
The preliminary due diligence schedule for CY 2026 is attached as Exhibit A. Staff anticipates seven (7) due diligence meetings to be conducted in-person or virtually. Additional details related to each investment manager are included in the exhibit. More information regarding the number of expected trips and trip timing will be shared with the Board once that information becomes available, with the intention of providing a date certain in order to facilitate availability.
At the Investment Committee meeting, a question was raised as to whether the SBCERA Due Diligence policy requires that on-site visits be made to corporate headquarter offices as opposed to other corporate offices. The Committee requested that staff review and bring the policy requirements to the full Board for a discussion. The Policy, which is attached as Exhibit D, provides in pertinent part as follows:
On-site or remote investment due diligence is required for all managers, at least once every three years. Typically, managers will be subject to such due diligence every other year. Managers that will not be visited at least once every three years must be approved for exception by the Board. A minimum of one staff member is required at each meeting; consultant support is recommended but not required. The precise manner of conducting investment due diligence shall be decided based upon the following criteria: (1) cost; (2) whether due diligence can be effectively conducted by video conference or other remote means, or whether physical access to the manager's staff and facilities is required; (3) if travel to the manager's facilities is required and the manager is based outside the continental United States, whether due diligence can be effectively conducted by a visit to an office in the continental United States, or whether overseas travel is necessary; (4) the length of time that has passed since due diligence has been conducted for the manager; (5) whether staff, trustees, or consultants are aware of specific concerns regarding the manager; (6) the avoidance of any appearance of waste or impropriety; and (7) other considerations as appropriate.
Note: Chief Investment Officer may defer selected remote or on-site meetings depending upon schedule conflicts or other business considerations.
Based upon staff’s review of the policy, the policy is silent as to “corporate headquarters” or “corporate offices”.
Exhibit A also includes a list of existing exceptions for investment due diligence visits. No new exceptions are being requested at this time. For reference, Exhibit B includes a list of the due diligence meetings which have been completed in CY 2025; Exhibit C is a look-ahead to anticipated due diligence in CY 2027.
COMMITTEE REVIEW:
The Committee voted 3-0 to continue this item to the full Board for discussion and decision after giving the Board the opportunity to review the Investment Due Diligence Policy which is attached as Exhibit D. Trustee Newcomer left the meeting early and was absent for the vote.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Eydie Cox
ATTACHMENTS:
Exhibit A: Proposed CY 2026 Due Diligence Schedule & Existing List of Exceptions
Exhibit B: CY 2025 Completed Due Diligence Items
Exhibit C: CY 2027 Tentative Look-ahead Schedule
Exhibit D: SBCERA Investment Due Diligence Policy