Despite persistent uncertainty in global markets, the Los Angeles County Employees Retirement Association (LACERA) posted strong results across its portfolio, with global equity returns up 11.3% year to date and 15.1% over the past year.
“That’s far in excess of our capital market expectations,” said Jonathan Grabel, LACERA’s chief investment officer, during an August Board of Trustees meeting. “I mean, that’s very strong returns. And once again, something that one may not expect in an environment where there is some uncertainty.”
As of June 30, 2025, the $85.2B pension fund had generated a 2.7% return for the month, surpassing expectations for any single month. It also closed the fiscal year with $1.5B in cash on hand.
For the fiscal year, the pension fund returned 9.7%, in line with its one-year portfolio benchmark. LACERA also came close to its three-year benchmark (8.4% vs 8.6%) and outperformed its benchmarks over five- (9.8% vs 8.5%) and 10-year (7.9% vs 7.4%) annualized periods.
“Effectively, what that says is that the portfolio is doing its job,” said Grabel. “Given the various market events that have occurred between July 1, 2015 and June 30 of this past year, it’s remarkable all that’s happened, and the portfolio has exceeded our expectations, once again, through a good asset allocation.”
For the fiscal year, all functional categories — growth, credit, real assets, risk reduction, overlays, hedges, and other assets — were positive, he noted. LACERA’s growth portfolio was up 11.5%; however, credit led the way with a 16.6% return for the fiscal year, as well as 13.1% and 10.3% over three- and five-year periods. Real assets returned 6.4%, followed by risk reduction (5.9%).
Global equities, which is a component of the fund’s growth portfolio, was up 16.5% for the fiscal year. While equity did come in slightly below the credit portfolio, Grabel cautioned that it’s not a trend he expects to continue. “If a fixed asset outperforms a growth asset, I think that would cause us to revisit our capital market expectations.”
Hedge funds, a part of the fund’s risk-reduction portfolio, returned 7.2%, which he noted exceeded LACERA’s actuarial benchmark. Infrastructure was up 15.6% for the fiscal year, and while private equity was up 3.1%, it lagged its benchmark, he said.
The private equity portfolio has been somewhat of a headwind to the total fund’s performance, said Grabel, noting it’s something the team is working hard to rectify. He pointed out that there has been fewer initial public offerings and fewer sales in the space compared to five years ago. Still, he said the IPO window is opening up slowly, which can act as an accelerant toward more deal activity. “Maybe we’re in a period where things start to change with more transactions.”
