The $16.37B San Bernardino County Employees’ Retirement System is earmarking $575M credit investment vehicles, as it seeks to capitalize on specialized and diversified credit opportunities globally.
“As capital markets evolve and economic conditions shift, we recognize that investment managers may adapt their focus toward strategies with stronger opportunities for risk-adjusted returns, including the development of new approaches,” said a SBCERA spokesperson. “That’s why we launched a project to identify capabilities in global credit to inform future investment decisions.”
In 2024, the investment team began expanding the portfolio’s existing exposure to European credit, which included a comprehensive market survey and identification of priority areas, noted the spokesperson.
At its most recent investment committee meeting, the pension’s consultant NEPC recommended several allocations to the board stemming from the fund’s research, including $200M to the Goldman Sachs Private Credit Global Franchise. Of that, $100M would be invested in West Street Strategic Solutions II, with the remaining $100M allocated to a customized co-investment vehicle structured as a Fund of One, disclosed the recent meeting materials.
The West Street fund invest across the capital structure in high-quality companies, with a portfolio diversified across 30 to 50 investments. According to the meeting materials, the fund will focus primarily on the Americas, with 50% to 60% of assets targeted toward that region, while Europe is expected to comprise 20% to 30%, and Asia between 10% and 15%. The investments will range across the acquisitions landscape, including funding leveraged buyouts and add-on investments that manage existing capital structure and liquidity needs.
The corresponding Fund of One vehicle in the Goldman Sachs MCA will target sectors such as asset-backed finance, project finance and infrastructure debt, global trade receivables, mezzanine or junior direct lending, and senior direct lending, noted the materials.
The consultant also recommended a $200M commitment to Arini Credit, broken into three allocations: $50M to the Arini Credit Master Fund, $75M to Arini Credit Opportunities Fund II, and another $75M to a Fund of One co-investment vehicle.
Arini specializes in European corporate credit and employs a fundamental, opportunistic approach to investing across both traditional credit and credit-linked securities. According to materials presented during the meeting, the manager’s strategy is designed to capitalize on market inefficiencies and dislocations within the European credit landscape. Historically, it has shown strong performance, including a 17.3% new internal rate of return from January 2022 through June 2025. The fund targets a new return of 15% plus over a market cycle.
In a further move to diversify credit exposure, the consultant proposed a $175M commitment to Arrow Global Group, including $125M to Arrow Credit Opportunities III and $50M to a separately managed account.
Arrow’s strategy rests on three pillars, which the fund can flexibly navigate depending on market conditions: credit portfolios and single-name investment (40% to 60% target), bankruptcies and restructurings (25% to 35% target), and secured collateral or value-add opportunities (15% to 25% target). The fund maintains a strong focus on European markets and distressed opportunities.
The separately managed account may include investments from the ACO III fund as well as from the Arrow Lending Opportunities I fund, the first commingled vintage in Arrow’s real estate lending platform focused on European real estate bridge loans and development loans.
The most recent recommendations underscore the pension plan’s ongoing effort to deepen its exposure to credit markets through flexible, manager-led structures that allow for customized implementation and opportunistic co-investment alongside flagship strategies.
