MEKETA.COM
San Jose Federated City Employees’ Retirement System
San Jose Police & Fire Department Retirement Plan
October 15, 2026
Public Safety, Finance, and Strategic
Support Committee (PSFSS)
Meeting PRESENTERS
John Flynn
Chief Executive Officer
Office of Retirement
Services
Jay Kwon
Chief Investment Officer
Office of Retirement
Services
1 Agenda Item (d)1.
San Jose Federated City Employees’ Retirement System and San Jose Police & Fire Department Retirement Plan Public Safety, Finance, and Strategic Support Committee (PSFSS) Meeting MEKETA.COM
Asset Allocation–The Most Important Determinant of Return 2 Asset Allocation
Strategy, 91%
Security Selection,
5%
Market Timing, 2% Other Factors, 2%
1Source: Roger G. Ibbotson. Does Asset Allocation Policy Explain 90, 93 or 100 Percent of Performance? Financial Analyst Journal, January/February 2000; Brinson, Singer and Beebower. Determination of Performance III. Update. Financial Analysts Journal, May/June 1991. Based on U.S. pension-fund data from 1977 to 1987. The asset allocation strategy includes broad market exposure.
San Jose Federated City Employees’ Retirement System and San Jose Police & Fire Department Retirement Plan Public Safety, Finance, and Strategic Support Committee (PSFSS) Meeting MEKETA.COM
Asset Class Net Performance Summary
San Jose City Federated Employees’ Retirement System
Total Fund as of June 30, 2026
Market Value
($)
% of
Portfolio
QTD
(%)
YTD
(%)
1 Yr
(%)
3 Yrs
(%)
5 Yrs
(%)
10 Yrs
(%)
S.I.
(%)
Inceptio
n Date
Total Fund Aggregate 3,925,543,839 100.0 7.1 6.4 13.6 11.0 7.0 8.3 7.2 Jan-94 Policy Benchmark 8.7 7.8 16.1 12.1 7.6 8.7 7.5
Investable Benchmark Portfolio 8.7 7.6 15.7 11.7 7.1 8.2 -- Low-Cost Passive Portfolio 10.3 9.3 18.8 14.7 7.4 -- -- 60/40 MSCI ACWI IMI/BBgBarc Global Aggregate 9.2 7.0 14.4 12.9 5.7 7.7 -- Liability Benchmark Portfolio 0.9 0.4 2.9 -0.5 -5.6 -- -- InvMetrics All Public DB Plans > $1B Median 7.4 6.9 14.2 11.6 6.7 8.7 7.8 InvMetrics All Public DB Plans > $1B Rank 60 69 63 60 36 69 95 → The San Jose Federated City Employees’ Retirement System investment return ranked in the third quartile of the peer group for both the calendar year-to-date period and the trailing one-year period. Over longer-term periods ending June 30, 2026, the Retirement System’s annualized return ranked in the second quartile of the peer group over five years and in the third quartile over both the three- and ten-year periods. The peer group included 107 public defined benefit pension plans with market values over $1 billion.
3 San Jose Federated City Employees’ Retirement System and San Jose Police & Fire Department Retirement Plan Public Safety, Finance, and Strategic Support Committee (PSFSS) Meeting MEKETA.COM
Asset Class Net Performance Summary
City of San Jose Police and Fire Department Retirement Plan Total Fund as of June 30, 2026
Market Value
($)
% of
Portfolio
QTD
(%)
YTD
(%)
1 Yr
(%)
3 Yrs
(%)
5 Yrs
(%)
10 Yrs
(%)
S.I.
(%)
Inceptio
n Date
Total Fund 6,202,478,435 100.0 7.0 6.2 13.1 10.9 6.9 8.3 8.4 Mar-71 Policy Benchmark 7.9 7.1 14.6 11.5 7.2 8.4 --
Investable Benchmark Portolio 7.9 7.0 14.4 11.5 6.9 8.2 -- Low-Cost Passive Portfolio 9.0 8.3 17.2 14.0 7.2 -- --
60/40 MSCI ACWI IMI/BBgBarc Global Aggregate 9.2 7.0 14.4 12.9 5.7 7.7 -- Liability Benchmark Portfolio 0.9 0.4 2.9 -0.5 -5.6 -- -- InvMetrics All Public DB Plans > $1B Median 7.4 6.9 14.2 11.6 6.7 8.7 -- InvMetrics All Public DB Plans > $1B Rank 63 77 73 62 40 72 -- → The City of San Jose Police and Fire Department Retirement Plan investment returns ranked in the fourth quartile of the peer group for the calendar year-to-date period and in the third quartile for the trailing oneyear period. Over the longer-term periods ending June 30, 2026, the Retirement Plan’s annualized return ranked near median in the peer group over three years, in the second quartile over five years, and in the third quartile over the ten-year period. The peer group included 107 public defined benefit pension plans with market values over $1 billion.
4 San Jose Federated City Employees’ Retirement System and San Jose Police & Fire Department Retirement Plan Public Safety, Finance, and Strategic Support Committee (PSFSS) Meeting MEKETA.COM
Appendix
5 San Jose Federated City Employees’ Retirement System and San Jose Police & Fire Department Retirement Plan Public Safety, Finance, and Strategic Support Committee (PSFSS) Meeting MEKETA.COM
There Has Been a Decline in Available Investment Returns1 0%
20%
40%
60%
80%
100%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2026
Equity Expected Return 16.7% 15.0% 8.8% 7.9% 3.4% 5.3% 6.9% 5.7% 5.1% 3.9% 3.8% Bond Expected Return 11.3% 12.6% 8.9% 8.8% 7.5% 5.2% 4.9% 3.2% 2.9% 5.6% 5.2% 60/40 Eq/Bond Exp. Ret. 14.8% 14.3% 9.1% 8.5% 5.3% 5.5% 6.4% 5.0% 4.5% 4.9% 4.6% Actual 10-year Return 15.5% 12.6% 14.0% 10.3% 2.0% 6.5% 9.6% 8.4% Probability of Earning 7.0% 99.0% 99.0% 73.0% 67.0% 30.0% 33.0% 42.0% 27.0% 22.0% 26.0% 24.0% …
Percent Return
→ The chart above illustrates that a portfolio comprised of 60% domestic stocks and 40% investment grade bonds has produced diminishing expected returns, as well as actual returns, over the past 30 years. 1 Expected return assumptions for 1) Bonds equals the yield of the ten-year Treasury plus 100 basis points, and 2) Equities equals the dividend yield plus the earnings yield of the S&P 500 index (using the inflation-adjusted trailing 10-year earnings). Probability calculation is for the subsequent ten years.
6 San Jose Federated City Employees’ Retirement System and San Jose Police & Fire Department Retirement Plan Public Safety, Finance, and Strategic Support Committee (PSFSS) Meeting MEKETA.COM
Federated Discount Rate History
Years Fiscal Year 10 Year US Treasury Rate
(%)
Discount Rate
(%)
Fiscal Year Return1
(%)
Excess Performance to Discount Rate
(%)
1997 6.51 8.25
1 2017 2.31 6.875 7.5 0.6
2 2018 2.85 6.75 5.9 -0.9
3 2019 2.00 6.75 4.3 -2.5
4 2020 0.66 6.75 3.6 -3.2
5 2021 1.45 6.625 29.2 22.6
6 2022 2.98 6.625 -4.4 -11.0
7 2023 3.81 6.625 7.5 0.9
8 2024 4.39 6.625 9.7 3.1
9 2025 4.25 6.625 9.6 3.0
10 2026 4.44 6.625 13.6 7.0
6.9% 7.5% 6.8% 5.9% 6.8% 4.3% 6.8% 3.6% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6%
29.2%
(4.4%)
7.5% 9.7% 9.6% 13.6% 0.6%
(0.9%) (2.5%) (3.2%)
22.6%
(11.0%)
0.9% 3.1% 3.0% 7.0%
-15%
-5%
5%
15%
25%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Plan Return versus Discount Rate
Discount Rate (%) Fiscal Year Return¹ (%) Excess Return (%) → The Federated System has had an average annual return for the past 10 years of 8.3%. Financial optimizers typically project a 50% probability of meeting the expected returns each year, so we would expect that approximately half of the time investments will outperform the expected return, and approximately half of the time, investments will lag the projected return.
1 Fiscal Year Ends 6/30. Returns are net of fund management fees. 7 San Jose Federated City Employees’ Retirement System and San Jose Police & Fire Department Retirement Plan Public Safety, Finance, and Strategic Support Committee (PSFSS) Meeting MEKETA.COM
Police and Fire Discount Rate History
Years Fiscal Year 10 Year US Treasury Rate
(%)
Discount Rate
(%)
Fiscal Year Return1
(%)
Excess Performance to Discount Rate
(%)
1997 6.51 8.00
1 2017 2.31 6.875 9.7 2.8
2 2018 2.85 6.75 6.9 0.2
3 2019 2.00 6.75 4.3 -2.5
4 2020 0.66 6.75 3.1 -3.7
5 2021 1.45 6.625 26.3 19.7
6 2022 2.98 6.625 -5.0 -11.6
7 2023 3.81 6.625 7.7 1.1
8 2024 4.39 6.625 9.7 3.1
9 2025 4.25 6.625 10.0 3.4
10 2026 4.44 6.625 13.1 6.5
6.9% 6.8% 6.8% 6.8% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6% 9.7% 6.9% 4.3% 3.1%
26.3%
(5.0%)
7.7% 9.7% 10.0% 13.1%
2.8% 0.2%
(2.5%) (3.7%)
19.7%
(11.6%)
1.1% 3.1% 3.4% 6.5%
-15%
-5%
5%
15%
25%
35%
45%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Plan Return versus Discount Rate
Discount Rate (%) Fiscal Year Return¹ (%) Excess Return (%) → The Police & Fire Plan has had an average annual return for the past 10 years of 8 .3%. Financial optimizers typically project a 50% probability of meeting the expected returns each year, so we would expect that half of the time, investments will outperform the expected return, and half the time, investments will lag the projected return
1 Fiscal Year Ends 6/30. Returns are net of fund management fees. 8 San Jose Federated City Employees’ Retirement System and San Jose Police & Fire Department Retirement Plan Public Safety, Finance, and Strategic Support Committee (PSFSS) Meeting MEKETA.COM
9 Disclaimer
THIS REPORT (THE “REPORT”) HAS BEEN PREPARED FOR THE SOLE BENEFIT OF THE INTENDED RECIPIENT (THE “RECIPIENT”).
SIGNIFICANT EVENTS MAY OCCUR (OR HAVE OCCURRED) AFTER THE DATE OF THIS REPORT, AND IT IS NOT OUR FUNCTION OR RESPONSIBILITY TO UPDATE THIS REPORT. THE INFORMATION CONTAINED HEREIN, INCLUDING ANY OPINIONS OR
RECOMMENDATIONS, REPRESENTS OUR GOOD FAITH VIEWS AS OF THE DATE OF THIS REPORT AND IS SUBJECT TO CHANGE AT ANY TIME. ALL INVESTMENTS INVOLVE RISK, AND THERE CAN BE NO GUARANTEE THAT THE STRATEGIES, TACTICS, AND METHODS DISCUSSED HERE WILL BE SUCCESSFUL.
THE INFORMATION USED TO PREPARE THIS REPORT MAY HAVE BEEN OBTAINED FROM INVESTMENT MANAGERS, CUSTODIANS, AND OTHER EXTERNAL SOURCES. SOME OF THIS REPORT MAY HAVE BEEN PRODUCED WITH THE ASSISTANCE OF ARTIFICIAL INTELLIGENCE (“AI”) TECHNOLOGY. WHILE WE HAVE EXERCISED REASONABLE CARE IN PREPARING THIS REPORT, WE CANNOT
GUARANTEE THE ACCURACY, ADEQUACY, VALIDITY, RELIABILITY, AVAILABILITY, OR COMPLETENESS OF ANY INFORMATION CONTAINED HEREIN, WHETHER OBTAINED EXTERNALLY OR PRODUCED BY THE AI.
THE RECIPIENT SHOULD BE AWARE THAT THIS REPORT MAY INCLUDE AI-GENERATED CONTENT THAT MAY NOT HAVE CONSIDERED ALL RISK FACTORS. THE RECIPIENT IS ADVISED TO CONSULT WITH THEIR MEKETA ADVISOR OR ANOTHER PROFESSIONAL ADVISOR BEFORE MAKING ANY FINANCIAL DECISIONS OR TAKING ANY ACTION BASED ON THE CONTENT OF THIS REPORT. WE BELIEVE THE
INFORMATION TO BE FACTUAL AND UP TO DATE BUT DO NOT ASSUME ANY RESPONSIBILITY FOR ERRORS OR OMISSIONS IN THE CONTENT PRODUCED. UNDER NO CIRCUMSTANCES SHALL WE BE LIABLE FOR ANY SPECIAL, DIRECT, INDIRECT, CONSEQUENTIAL,
OR INCIDENTAL DAMAGES OR ANY DAMAGES WHATSOEVER, WHETHER IN AN ACTION OF CONTRACT, NEGLIGENCE, OR OTHER TORT, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS CONTENT. IT IS IMPORTANT FOR THE RECIPIENT TO CRITICALLY EVALUATE THE INFORMATION PROVIDED.
CERTAIN INFORMATION CONTAINED IN THIS REPORT MAY CONSTITUTE “FORWARD-LOOKING STATEMENTS,” WHICH CAN BE IDENTIFIED BY THE USE OF TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “EXPECT,” “AIM,” “ANTICIPATE,” “TARGET,” “PROJECT,” “ESTIMATE,” “INTEND,” “CONTINUE,” OR “BELIEVE,” OR THE NEGATIVES THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. ANY FORWARD-LOOKING STATEMENTS, FORECASTS, PROJECTIONS, VALUATIONS, OR RESULTS IN THIS REPORT ARE BASED UPON CURRENT ASSUMPTIONS. CHANGES TO ANY ASSUMPTIONS MAY HAVE A MATERIAL IMPACT ON FORWARD-LOOKING STATEMENTS, FORECASTS, PROJECTIONS, VALUATIONS, OR RESULTS. ACTUAL RESULTS MAY THEREFORE BE MATERIALLY DIFFERENT FROM ANY FORECASTS, PROJECTIONS, VALUATIONS, OR RESULTS IN THIS REPORT.
PERFORMANCE DATA CONTAINED HEREIN REPRESENT PAST PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.