FROM: Don Pierce, Chief Investment Officer
SUBJECT: Asset Allocation Review and Recommendations
RECOMMENDATION:
title
Approve NEPC’s 2026 Asset Allocation Review.
body
BACKGROUND:
Each year, NEPC updates their expected return estimates for various asset classes. We take the opportunity to review their findings with the SBCERA Investment Committee and Board. This report details the current SBCERA policy portfolio under the new asset class expectations and provides comparative portfolios for benchmarking purposes. While SBCERA reviews the asset allocation each year, the asset allocation does not necessarily change each year.
Recall that at the April 2026 Board meeting, NEPC presented their Preliminary Asset Allocation Review with Liabilities report which provided a detailed review of the plan’s liabilities including a discussion about the changes in contribution rates as the plan’s funding priorities are realized.
Today’s Asset Allocation report from NEPC indicates the current asset allocation meets the Board approved 7.25% funding rate over the next 10-year period and the 30-year horizon. As part of this review, alternative mixes are offered for the Board’s consideration.
COMMITTEE REVIEW:
This item was reviewed by the Investment Committee at its May 21, 2026 meeting, and recommends Board approval with a 4-0 vote. Trustee Fiorino participated as Alternate Committee Member.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Thomas Kim
ATTACHMENTS:
Exhibit A: 2026 Asset Class Assumptions