SURS approves $50 million in real assets, returns net 8.3% in fiscal 2024, approves preliminary FY 26 state contribution

SURS approves $50 million in real assets, returns net 8.3% in fiscal 2024, approves preliminary FY 26 state contribution

October 29, 2024| News, Press Release

The State Universities Retirement System's Board of Trustees voted unanimously on Oct. 24 to commit the lesser of $50 million or 10% of total fund commitments to Belay Ventures Fund IV, subject to successful contract negotiations. This is a new relationship for SURS within its Growth Oriented -Traditional Growth Asset Class.

Other investment actions:

• The board agreed to liquidate the UBS portfolio and reallocate funds to other managers within the portfolio.

• In a continuing effort to further reduce investment manager fees and costs associated with SURS defined contribution plans - the Retirement Savings Plan (RSP) and the Deferred Compensation Plan (DCP) - the board decided to transfer assets from the SMA structure of Fiera Capital SMID Growth Fund to the Founders Class of the CIT structures. The move will reduce the net investment cost of the SURS Small-Mid Cap Growth Equity Fund from 0.655% to 0.60%.

• Trustees also voted to terminate the 2022 Tail Risk Hedge and Volatility Management RFP.

In other investment news:

• SURS portfolio returned 8.3%, net of fees, during fiscal year 2024, well above the long-term 6.5% assumed rate of return but below the return for the policy benchmark of 9.0%. Portfolio returns, net of fees, are 7.4% over the last five years and 6.62% over the last 10 years, each exceeding both the long-term assumed rates and the policy benchmarks.

In other actions:

• The board certified SURS preliminary state contribution of $2,320,627,000 for fiscal year 2026, an increase of less than 5% from fiscal year 2025 ($2,212,810,000).

Each year, an independent actuary retained by SURS evaluates the System and determines the required state contribution under the formula outlined in Illinois law (40 ILCS 5/15-155). The formula requires the state to make an annual contribution to SURS that will allow it to reach a funded status of 90% by the end of fiscal year 2045. Several actuarial assumptions impact the state contribution including the investment return, mortality rates and salary growth.

The board is required to certify the final state contribution for fiscal year 2026 by Jan. 15, 2025.

• Trustees also certified the fiscal year 2026 state contribution to the Community College Health Insurance Security Fund of $10,966,632.

• Gabriel, Roeder, Smith & Company (GRS) was retained as the actuarial consultant for SURS, subject to successful contract negotiations.