People - JUNE 30, 2014

SFERS searches for real assets consultant, launches program

by Reg Clodfelter

The $19.4 billion San Francisco City and County Employees’ Retirement System is currently searching for a consultant for its newly formed real assets portfolio.

The new real assets portfolio will include SFERS’ $1.7 billion real estate portfolio, whose senior manager, Lindsay Adams, retired last month, but may also invest in other inflation-sensitive assets including, but not limited to, oil and gas, renewable energy, metals, timber, infrastructure and inflation-linked bonds. According to a source at the retirement system, SFERS will have a clearer picture of what asset classes the portfolio will be targeting once a consultant has been chosen.

SFERS is expecting to choose finalists for the position on July 7 and make a final selection on Aug. 13. An RFP was issued for the position on June 12 with a deadline of June 25. A final decision is set for Aug. 13. According to the RFP, when making its decision, SFERS will give equal weighting to: organization, personnel and clients; investment selection philosophy and due diligence practice; strategic and tactical investment planning; monitoring, performance measurement and reporting; and fee proposal.

The consultant will be expected “to assist SFERS with strategic and tactical investment planning, market research, investment due diligence, portfolio monitoring, performance measurement and reporting for its real assets portfolio with an initial focus on real estate investments.”

The contract will be for three years, with SFERS retaining the option for two one-year contract extensions after the initial three-year period has expired.

As of now, the real assets portfolio’s target allocation is still being determined, though the real estate portfolio had a target allocation of 12 percent with an acceptable range of 9 percent to 15 percent. The portfolio’s current allocation is approximately 9.3 percent.

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