The Kern County Employees’ Retirement Association (KCERA) approved a new private credit commitment last month that offers downside protection.
During its latest board meeting, Miller announced a $40M commitment to Fortress Legal Assets Fund II, which expands the pension’s broader relationship with Fortress Investment Group. The firm now manages five KCERA fund investments across three private credit strategies: legal assets, lending, and credit opportunities.
The newest Fortress fund will invest in legal assets across five verticals — law firm assets, corporate litigation portfolio transactions, specialty finance investments, single-case litigation, and settlements. The fund emphasizes downside protection and disciplined risk management in evaluating and structuring transactions.
KCERA also committed $20M to a re-up of OrbiMed Private Investments Fund X, doubling the pension’s prior $10M commitment to Fund IX. The allocation falls within KCERA’s private equity portfolio and reflects continued confidence in OrbiMed’s healthcare-focused strategy.
The commitments coincided with targeted adjustments KCERA made to its portfolio at the end of September. Miller shared that the fund committed $10M to Wellington Commodities, a U.S.-based firm specializing in commodity risk management that serves farmers, agribusinesses, and individual investors. KCERA also committed $20M to Harvest Midstream, a privately held midstream energy company based in Houston, Texas.
“Those allocations were below their targets,” said Miller. “We brought them to target, and we reduced our cash exposure by $25M.”
He noted the fund was overweight to cash and was aiming reduce its exposure as the Fed has started cutting interest rates again, with additional cuts expected through the remainder of this year. Miller said the cash reduction was in the BlackRock Short Duration strategy, adding that KCERA plans to continue reducing cash and bringing other underweight positions, including duration, closer to target in the coming months.
As of September 30, KCERA’s plan assets stood at just over $6.7B, marking the close of the first fiscal quarter. Miller highlighted that financial markets were very strong in the first quarter of fiscal year 2026, which reflected in the fund’s performance in the first quarter, which he noted was “tracking north of 4%.”
Public equities was a standout performer, he said, with the fund slightly overweight in this allocation by approximately 1.4% due to outperformance. By contrast, core fixed income remains underweight by 6.6% against its target of 25.0%, a stance KCERA has maintained for some time. “This has been an underweight we have had in the portfolio for an extended period of time on the view that yields are too low,” said Miller. “We think yields are going to be moving higher, so bond prices are going to drop.”
Private markets remain a focus for the fund, said Miller, noting the fund is continuing to build out its private equity portfolio in order to meet its private markets target of 18%.
