Message from Chief Investment Officer Rod June

In the last article, I discussed the unfolding of the pandemic and its impact on the global investment market. Despite the steep decline in early 2020, a rapid reversal resulted in a net return of 29.09% for LACERS’ one-year total fund ending June 30, 2021.

With the worst of the pandemic behind us, we find ourselves in a different economic paradigm. Have you noticed higher consumer prices and interest rates? And if that wasn’t enough, the political situation with Russia and lingering supply chain issues adversely impacted investments within LACERS’ total fund, which delivered a negative 7.01% net return for the one-year period ending June 30, 2022. 

The lifting of interest rates (a monetary policy tool to tame inflation) was not unexpected, but the magnitude of interest rate increases did catch investors by surprise, leading to steep declines in the public equity market and a higher cost to businesses, which are then passed on to consumers. Since LACERS invests much of its investment portfolio in these businesses, we have experienced declines in our investment valuations.

Despite these concerns, the Board continues to navigate market uncertainty using its strategic asset allocation roadmap to ensure the delivery of earned retirement benefits without interruption.