Prediction Partly held up AI assessment confidence: 85% certainty 3/5 debate potential 3/5

Garcia: PERA targets 7.25% return using 10% beta leverage and 1% alpha

Dominic Garcia · Dominic Garcia – Risk-based Investing at New Mexico PERA (Capital Allocators, EP.187) · Apr 5, 2021 · at 22:56

Dominic Garcia, CIO of New Mexico PERA, discusses how public pensions can reach actuarial return targets despite low cash rates by using modest embedded leverage.

0:00 / 0:34exact quote · 34.5s

720p mp4 · rendered on demand · StarZero watermark

“What we're looking at is in our beta book, we're looking to incorporate embedded leverage in the asset classes and then about in a very modest amount, which is about 10% at the total asset allocation level. So we think we can get somewhere around a six percent ish, six to six and a quarter percent in just the beta book with that. And then the alpha. We still think we can generate about a one percent alpha going forward. Obviously that's a much more difficult thing to achieve and et cetera. But I think when you put those two together, you can get to about a seven and a quarter percent return.”

quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →

The claim, plainly

Dominic Garcia projects that New Mexico PERA can reach its 7.25% return target by applying roughly 10% embedded leverage to generate 6% to 6.25% from beta and adding approximately 1% in excess alpha.

a quote alone can be ambiguous, so this restates it with the references and context of the conversation around it resolved. AI-written; the tape below the player is the source.

Assessment

In an interview published on April 5, 2021, Dominic Garcia (then-Chief Investment Officer of New Mexico PERA) outlined a projection for reaching PERA's 7.25% target return through roughly 6.0% to 6.25% from leveraged beta plus approximately 1.0% in alpha. Subsequent official performance reports submitted to the New Mexico Legislature's Investments and Pensions Oversight Committee (IPOC) show mixed results across these components. For the 3-year annualized period ending March 31, 2024, the active management/alpha component succeeded, generating +1.63% annualized excess return over the policy benchmark (surpassing the ~1% target). However, the beta book generated only 3.80% annualized (missing the 6.0% to 6.25% target), resulting in a total 3-year annualized net return of 5.43% (falling short of the 7.25% target). Because the alpha generation leg was achieved but the beta and total return targets were not reached, the projection is graded partially true.

New Mexico PERA performance report to IPOC (reported July 1, 2024) shows a 3-year annualized net return of 5.43% as of March 31, 2024, against a policy benchmark of 3.80% (Value Add / Alpha of +1.63%).
Dominic Garcia stepped down as CIO of New Mexico PERA on June 4, 2021, shortly after the podcast was published.
As of June 30, 2025, PERA's 3-year annualized return rebounded to 7.49%, but beta returned 10.62% while alpha was negative (-3.13%), failing to match the projected beta/alpha breakdown.

Checked against

[1] ai-cio.com [2] institutionalinvestor.com [3] institutionalinvestor.com [4] nmlegis.gov [5] nmlegis.gov [6] nmlegis.gov [7] nmlegis.gov [8] nmlegis.gov

NM PERA annual comprehensive financial report 2023 2024 investment returns site:nmlegis.gov "PERA" "annualized" "Policy Benchmark" 2024 Dominic Garcia New Mexico PERA CIO departure CBRE New Mexico PERA annualized returns 2021 2022 2023 2024 benchmark

assessed as of 2026-09-02

This assessment is an AI reading of a public statement, made against the cited references with the confidence shown. It can be wrong. The quote, the tape and the references are all on this page; if something is off, use report an error below. full disclaimer →

Mentioned

Dominic Garcia New Mexico PERA

⚑ Spot an error? Report it

More from Dominic Garcia

Prediction Not checkable as stated

Garcia: Bitcoin will drop to its underlying tech value without government backing

“If governments are not going to embrace it honestly, it should go down to just the technology value of it.”

Dominic Garcia Apr 5, 2021 ▶ 49:21 Dominic Garcia – Risk-based Investing at New Mexico PERA (Capital Allocators, EP.187)

Insight

Garcia: Private equity should be evaluated for PME spread, not headline IRR

“The reason why you buy private equity isn't for the total return, in my view, it's the relative return to your PME, because a private equity portfolio or private equity management, let me just give you an example. Let's say they generate a 12% IR. Well, if you…”

Dominic Garcia Apr 5, 2021 ▶ 44:36 Dominic Garcia – Risk-based Investing at New Mexico PERA (Capital Allocators, EP.187)

Insight

Garcia: Private assets are active management vehicles, not distinct asset classes

“We view private assets as not asset classes. We view the private assets as another way to access active management or alpha.”

Dominic Garcia Apr 5, 2021 ▶ 26:31 Dominic Garcia – Risk-based Investing at New Mexico PERA (Capital Allocators, EP.187)

Opinion

Garcia: Hedge funds are pound-for-pound the best risk-adjusted alpha generators

“We're buying market neutral hedge funds because on a risk adjusted basis, hedge funds are still pound for pound the best alpha generators.”

Dominic Garcia Apr 5, 2021 ▶ 27:30 Dominic Garcia – Risk-based Investing at New Mexico PERA (Capital Allocators, EP.187)

Opinion

Garcia: SWIB is a best-in-class public pension in the US and globally

“First of all, I think SWIB is a best-in-class public pension on a number of fronts here in the United States, and I think even globally.”

Dominic Garcia Apr 5, 2021 ▶ 9:58 Dominic Garcia – Risk-based Investing at New Mexico PERA (Capital Allocators, EP.187)

Insight

Garcia: Institutional investors are risk allocators first, not capital allocators

“And I think some of the best things that I learned was portfolio construction and understanding that we're not capital allocators. We're actually risk allocators first.”

Dominic Garcia Apr 5, 2021 ▶ 11:28 Dominic Garcia – Risk-based Investing at New Mexico PERA (Capital Allocators, EP.187)

Garcia: PERA targets 7.25% return using 10% beta leverage and 1% alpha

More from Dominic Garcia

Turn any episode into a week of clips.