San Jose retirement fund reports strong fiscal‑year returns and tees up asset‑liability study

The San Jose Office of Retirement Services’ chief investment officer, Jay Quan, told the board the plan’s preliminary fiscal‑year‑to‑date return estimate from consultants was 14.7% for the pension plan and 18.2% for the healthcare trust. "Estimates provided by Makita as of Tuesday the 16th for the pension ... are fiscal year to date 14.7%," Quan said during the board’s meeting.

Quan said those market gains provide an opportunity for the board to revisit the plan’s risk posture. He outlined a schedule to produce a formal asset‑liability study: Chiron will supply liability inputs, Makita will run economic‑regime and scenario models, and the board will review recommended strategic asset allocation alternatives at its August meeting, followed by an IC deep dive August 25 and final consideration in September.

Trustees heard that staff has been more active in manager monitoring and in some cases has terminated underperforming managers. Christina, a public equity portfolio lead, said the board recently terminated two global managers—citing persistent underperformance and style mismatch—and has adjusted the international lineup. She described the portfolio’s regional targets (about 12% emerging markets, 12% international, ~25% U.S.) and said emerging markets performance this year has been concentrated in a few mega‑cap technology stocks, creating tracking and manager performance dispersion.

Trustees asked about the difference between reporting dates and the higher near‑term estimates; Quan explained the 14.7% figure reflected more recent data than the quarter‑end reports on the board packet. Trustees also pressed whether private‑markets exposure to AI and other disruptors is being monitored; staff and consultants said the asset‑liability study will be higher‑level, while private markets monitoring and selective allocations (value‑oriented buyouts, selective data‑center and power generation exposure) are intended to limit concentration risks.

Next steps: Makita and Chiron will present the asset‑liability study materials at the August board meeting and the IC meeting on August 25; staff plans to return with strategic allocation alternatives and a staff recommendation for the board to consider in September.

The article is based on the CIO update, the public equity presentation and related trustee Q&A.