Fiscal Year 2019-20, as you can imagine, was a year of uncertainties for investments. With the economy stalled due to the COVID-19 pandemic, LACERS ended the fiscal year with a slightly positive return thanks to an investment policy and asset allocation that is designed to withstand volatility and fluctuations in the market through a diversified portfolio that includes U.S. Equity, Non-U.S. Equity, Core Fixed Income, Credit Opportunities, Private Equity, Public Real Assets, Real Estate, and Cash asset classes.
Despite these severe economic and market headwinds, LACERS’ annual rate of return garnered 1.1% net of fees relative to the total fund benchmark of 4.0%. LACERS posted positive returns in the second quarter, which helped to offset the investment losses experienced during the initial phase of the pandemic.
While some attempt to draw parallels between the recent Covid-19 economic shock and the Great Financial Crisis (GFC), it is important to remember that the underlying causes and ultimate solutions to these issues differ greatly. Solving the problems brought on by the GFC required significant legal and regulatory reforms. Whereas during this pandemic, both Congress and the Federal Reserve are responding with extraordinary measures designed to absorb much of the economic impact from the pandemic.
During this unprecedented time, even the most sophisticated investors are reviewing their portfolios to determine the next steps. The LACERS Board and staff already know their next steps: remain calm and stay the course! The LACERS Board takes a long-term strategic view in establishing a diversified asset allocation policy that ensures the hard-earned retirement benefits will be paid over the decades to come.
For additional information, listen to LACERS Board of Administration meetings, via ZOOM, every second and fourth Tuesday of each month at 10 a.m. Visit https://www.lacers.org/agendas-and-minutes for log-in information.