Episode summary
OCERS CIO Molly Murphy on dynamic investing in volatile markets
Summary
Molly Murphy says OCERS has paired a data-driven process with a strong emphasis on human judgment, using AI first as a productivity tool and then as a way to improve portfolio decisions. She says the team began organizing around automation and AI in 2019, accelerated the work after ChatGPT made the tools more accessible in 2022, and now uses technology across the portfolio to generate faster signals and better execution.
She argues that a total portfolio approach can help, but only when governance, staff capacity and communication support it. OCERS still runs a hybrid model with strategic asset allocation targets and generous ranges, which she says gives the fund flexibility to be dynamic without losing discipline. That structure, she says, has helped performance over the past five to seven years.
On private markets, Murphy says OCERS currently favors private equity and infrastructure over private credit. She sees more risk in direct lending because of higher-for-longer rates, retail inflows and potential pricing stress, while infrastructure has been a more durable inflation hedge. She is also watching the AI theme spread across public equities, private credit, real estate and infrastructure, and says the fund is modeling stagflation risk while staying close to target weights.
Key takeaways
- Murphy says OCERS uses AI first to free up human time for qualitative judgment, not to replace investment staff.
- She says a hybrid total-portfolio approach works best when a plan has enough scale, governance and delegated authority to move quickly.
- Murphy says OCERS currently prefers private equity and infrastructure over private credit because direct lending faces inflation, rate and retail-flow pressure.
- She says infrastructure has been a more durable inflation hedge than real estate, and the fund is shifting more capital toward power generation and digital infrastructure.
- Murphy says the fund is modeling stagflation but has not changed its structure because current ranges already allow it to respond.
- She says OCERS wants to increase co-investments from about one out of every $10 to two out of 10 in private markets.
Notable quotes
“we've spent inordinate amount of the last five years trying to figure out how we can stay nimble and be decisive and be dynamic”
“let's use it as a productivity tool first so that humans can be doing the things that humans are best at”
“we like our private equity and our infrastructure probably more than we like our private credit at the moment”
“that has more public use which will be more stable over time. At least we believe it to be”
“what would we do if we really walked into a period of time of stagflation. I think that's the challenge”
How the episode opens
Today's episode is a special one as we sit down with Molly Murphy, chief investment officer of the Orange County Employees Retirement System, who has earned a markets group strategy award. Over the past several years, Molly has helped guide OSERS through a full market cycle, delivering a strong post2022 recovery with the fund returning 11.44% in 2023, followed by 9.96% in 2024. In 2025, the fund saw a net return of 14.6%.
Outperforming its benchmark, strong results in a time marked with uncertainty and market volatility. A key part of that story has been OSER's thoughtful approach to portfolio construction across both public and private markets. The portfolio's exposure to private equity, private credit, and real assets plays an important role within a broader strategy built on diversification, disciplined pacing, and long-term positioning.
In today's conversation, we'll unpack how Molly and her team built that performance, how they navigated the last few years, and what lessons they're carrying forward into the next phase of the cycle. Molly, congratulations and welcome. Thanks for joining us.
Thank you so much for having me today. — So, Molly, just want to dive right in because one of the strengths behind OSER's investment strategy is that it's very data driven. Um, and it's it's got a very datadriven approach. Can you tell me what does that look like in practice and how does it guide allocation decisions across the portfolio?
We definitely are a datadriven organization although I will tell you I'm a very intuitive investor. So I think everyone comes to the data approach in their own way. Some people need it foundationally in order to start their process and some of us need it more to confirm our process. So, I don't think there's a one-sizefits-all even amongst my team how we're using technology.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- hidden ai trade
- dynamic asset allocation
- scenario testing
- infrastructure vs private credit
- stagflation and geopolitical volatility
Watch the episode
Watch “OCERS CIO Molly Murphy on dynamic investing in volatile markets” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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