San Francisco nets about 18 pct from PE in FY 2015

The private equity portfolio provided a much-needed bright spot for the $20.3 billion pension system, which returned just 3.96 percent overall in fiscal 2015.

The retirement system’s $1.05 billion portfolio of venture capital holdings, which accounts for 43.7 percent of its private equity portfolio, led the way for the rest of the asset class. Venture capital generated 26.52 percent for San Francisco last year net of fees.

While returns in its early and late stage portfolios remained relatively modest, its $359.8 million balanced venture capital portfolio netted 58.58 percent, according to the report.

Returns generated by the pension’s $1.03 billion portfolio of buyout funds were considerably weaker than those in venture capital, netting 8.78 percent on the year.

The 10-year annualized return generated by the buyouts portfolio outperformed San Francisco’s venture capital holdings by a little more than a full percentage point however, with buyouts netting 14.6 percent compared to venture capital’s 13.59 percent.

San Francisco also maintains a small portfolio ($313.7 million) of special situations assets, which includes investments in distressed, subordinated debt/mezzanine, secondary, energy, and other niche funds. The special situations portfolio netted 22.05 percent during the last fiscal year and produced a 10-year annualized return of 20.06 percent.

San Francisco remains well under its 16 percent allocation target to private equity. The pension had 11.8 percent of its assets in the asset class as of June 30, according to the investment report. The pension values its portfolio at $2.4 billion.

Action Item: San Francisco’s FY 2015 investment report is available here: http://bit.ly/1PH17iw