The San Francisco Employees’ Retirement System (SFERS) manages retirement assets for employees of the City and County of San Francisco. With approximately $35 billion in assets under management as of mid-2024, SFERS serves active and retired city employees, including police, fire, and civilian workers.
Investment Strategy
SFERS employs a diversified investment strategy spanning public equities, fixed income, private equity, real estate, and other alternatives. The Retirement Board sets strategic allocation targets, guided by asset-liability studies and input from investment consultants and staff. The portfolio is designed to achieve long-term returns sufficient to fund the system’s pension obligations.
Public equities represent the largest portfolio component, with exposure to domestic and international markets. Fixed income provides portfolio stability and cash flow for benefit payments. SFERS has developed a notable alternatives program that takes advantage of the system’s location in one of the world’s most active investment management markets.
Private Markets Approach
SFERS’s private markets program is well-developed for a city-level pension system. The private equity allocation includes commitments to buyout, growth equity, venture capital, and secondary strategies. The system’s San Francisco location provides natural proximity to the Bay Area’s venture capital and technology investment ecosystem, and SFERS has historically maintained meaningful venture capital exposure that has contributed to portfolio performance.
Real estate investments span core, value-add, and opportunistic strategies across property types and geographies. Infrastructure is a growing component of the alternatives portfolio, with investments targeting stable cash-flow assets in transportation, energy, and utilities.
SFERS also maintains exposure to hedge fund strategies, providing diversification and downside protection relative to traditional market exposures.
The internal investment team conducts due diligence on prospective managers, evaluating track record, team quality, investment process, operational infrastructure, and alignment of interests. SFERS values strong governance and transparent communication from its general partners. The Retirement Board reviews and approves commitment recommendations, providing fiduciary oversight. Commitment sizes typically range from $25 million to $100 million depending on strategy.
Frequently Asked Questions
How large is SFERS's private equity program?
SFERS allocates approximately 12% of total assets to private equity, representing roughly $4 billion in committed capital. The system invests across buyout, growth, venture, and secondary strategies, benefiting from its proximity to the Bay Area's venture and growth equity ecosystem.
Does SFERS have notable venture capital exposure?
Yes. SFERS has maintained meaningful venture capital allocations, leveraging its San Francisco location and relationships with the Bay Area's technology-focused investment community. The venture allocation has contributed meaningfully to long-term portfolio returns.
How should managers engage with SFERS?
SFERS has an internal investment team that sources and evaluates opportunities with support from external consultants. The Retirement Board approves new commitments. Managers should submit materials directly to the investment staff or engage through consultant channels. Expect a structured due diligence process.
