LACERS BOARD UPDATE
By Michael R. Wilkinson, LACERS Commissioner
Email: MikeWilkinson4LACERS@gmail.com
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ACERS recently reported positive investment returns for the quarter ending March 31, 2024, and strong returns for the one-year period. The one-year return was 10.15 percent, three-year was 4.26 percent, five -year was 7.56 percent, ten-year was 6.86 percent and 20-year was 7.04 percent.
The three-year and five-year returns were better than the comparison benchmark, and the one-, ten- and 20-year returns trailed the benchmark.
Let’s take a moment to look at some of the asset classes that make up the LACERS portfolio. As regular readers of this column have read before, there is no single investment that does what we would like, which is make a high return each period and never have a bad day.
So, we look at choices like stocks that traditionally have high long-term returns but can be subject to ups and downs in value while we diversify with other asset classes such as bonds that have different risks. Bonds are not strongly correlated to stocks, so they may go up when stocks go down. Fair disclosure, this lack of correlation does not work in all markets.
The goal is to have an investment portfolio that will produce returns that match our investment projection of the assumed rate of return, currently at 7.0 percent, over the long term.
Two other investment classes are real estate and private equity. These are both classes that have unique characteristics and require expert investment management to successfully generate high returns and avoid taking undue risk.
The one-year return for private real estate was down 9.61 percent, while other periods were positive: 3-year, 4.57 percent; 5-year, 3.13 percent; 10-year, 6.39 percent; and 20-year, 4.99 percent.
Private equity returned 6.46 percent for the one-year period with returns for other periods as follows: 3-year, 14.41 percent; 5-year, 15.43 percent; 10-year, 13.07 percent; and 20-year, 13.09 percent
