The $11.9B San Diego City Employees’ Retirement System has earmarked $225M for its infrastructure pacing plan for fiscal year 2026, starting July 1.
According to the pension fund’s board meeting documents, the pacing plan will allocate $150M to open-ended core funds. Investment consultant Callan also recommended one or two funds for the pension fund during the time period.
The remaining $75M will be allocated equally between GCM Grosvenor and StepStone for a non-core strategy.
Callan recommended the pension plan invest in funds targeting middle-market strategies to complement the current managers on the roster, including Brookfield and KKR.
Further, the consultant proposed grouping core and core plus buckets into one and hiking its target allocation to 60% from 50% and reducing the target allocation to value-add and opportunistic to 60% from 70%.
Additionally, the consultant recommended the investment board target investments in open-end commingled funds for its core and core plus portfolio.
“Open-end commingled funds provide evergreen exposure to diversified portfolios of core infrastructure assets that produce stable yields with strong inflation linkage,” stated Pete Keliuotis, head of alternatives consulting at Callan and his team.
“SDCERS can also avoid additional layers of fees for core assets by investing directly in open-end funds.”
Additionally, SDCERS said the new commitments follow strong liquidity in fiscal 2025, prompting the redeployment of capital to maintain its 5% infrastructure target. StepStone and GCM Grosvenor each oversee 1.5% of that allocation, with the remaining 2% invested directly in funds.
StepStone has also launched the StepStone Atlantic Fund, with San Diego City as its sole investor, targeting infrastructure assets such as renewable energy, data centers and telecommunications through primary, co-investment and secondary deals.
Within infrastructure, the pension plan allocates to power generation, transportation, communication among other sectors including fiber and airports. The geographic focus continues to remain on US and Canada.
