By Muskan Arora
The $4
billion Seattle City Employees’ Retirement System has chosen NEPC as their new
consultant, pending board of administration’s approval on June 13 meeting.
While Meketa
was the other semi-finalist in the race, NEPC has been Seattle City’s
consultant since 2014.
Following
the issuing of the RFP in January 2024, the system scored each candidate based
on organizational factors (40%), consulting service factors (40%) and price
(20%).
After
conducting the required due diligence which included site visit, reference
checks, reputational risk review and operational risk review, the investment
committee solely chose NEPC.
Rose Dean from
NEPC would continue to serve as primary consultant, after the contract renews
on June 30 for five years.
In one of
the recent SCERS’ meeting, Tim McCusker, NEPC’s CIO spoke about
AI being one of the most scalable platforms as compared to the previous
technological shifts seen.
“With the new activities and efficiency benefits that
would be created by AI, in the current times, more than 80% of the growth is
focused on China, Europe and North America,” said McCusker.
The CIO also talks about the production of microchips
as one of the reasons for tension between China and US, which allows other
emerging markets including India to produce their own microchips.
“Presently there aren’t many limitations on data
creation but being able to organize that data is challenging. The processing
power and the energy usage needed to analyze this data do have some
sustainability issues. The material usage needs to be captured as well,” he
presented to the Seattle City board.
SCERS Portfolio
As of
Dec 31, the system allocates 44.9% or $1.76 billion to the public equity sleeve
against a target of 46% or $1.84 billion within the equity bucket.
Of that
same bucket, the system allocates 13.3% or $532 million to the private equity
sleeve against a target of 11% or $440 million.
In the
fixed income sleeve, Seattle has 15.6% or $624 million allocated to the core
fixed income sleeve against a target of 14% or $560 million.
Within
the fixed income sleeve, 4.9% or $196 million is allocated to the long-term
fixed income sleeve against a target of 5% or $200 million.
Credit
fixed income has 6.7% or $268 million allocation against a target of 7% or $280
million.
Under
the real assets bucket, the system allocates 11.3% or $452 million to the real
estate sleeve against a target of 12% or $480 million.
The
system allocates 2.7% or $108 million to their infrastructure sleeve, within
the real estate bucket, against a target of 5% or $200 million.
