The Florida Retirement System’s private equity portfolio rebounded strongly for the fiscal year 2010, posting returns of 21.52 percent, 1.3 percentage points more than the asset class’ benchmark. The figure is a drastic change from the private equity portfolio’s performance in the prior year, which was -25.8 percent.
The $109 billion pension has a target allocation to private equity of 5 percent and has a ceiling of 7 percent. The Florida State Board of Administration increased its target allocation to private equity from 3.5 percent to 5 percent last month, and bumped its allocation to debt-related funds to 3 percent. The pension’s actual allocation to private equity stood at 4 percent as of 31 May.
Florida has put much more focus on what it calls “strategic investments”, which include debt-related funds like those managed by Oaktree Capital Management, as well as infrastructure, timber and hedge funds. In June, the pension increased the allocation target to strategic funds from 1.8 percent to 11 percent, and for the first time carved out space for an up to 2 percent allocation to infrastructure.
Florida has made a rash of commitments to debt funds since March, committing $350 million to funds managed by Oaktree, ABRY, Varde, and is negotiating commitments to GSO and Audax.
On 18 June, the pension invested $41.2 million for nearly a 10 percent stake in Lexington Partners.
Last year, Florida made $1.2 billion in private equity commitments, according to its private equity consultant Hamilton Lane, and received $450 million in distributions. Florida's pension is the fourth largest in the US.
Florida's private equity programme was launched in 1988, and has a 6.5 percent internal rate of return since inception. The portfolio has $4.5 billion in unfunded commitments.