PA SERS alternatives returns 12.8%

The $27bn system is reducing its alternatives exposure to from 27% to 14% over a 10-year period.

The Pennsylvania State Employees’ Retirement System’s alternative investments portfolio generated a 12.8 percent return for the 2013 calendar year, according to a statement from the pension system.

The system returned 11.4 percent for alternatives in 2012. During the fourth quarter of 2013, PA SERS’ alternatives portfolio delivered a 4.8 percent return, compared to 2.6 percent during the same period in 2012.

Former PA SERS chief investment officer Anthony Clark retired on 31 December 2013 amid informal allegations of “possible criminal and unethical conduct”, according to a letter Pennsylvania state treasurer Robert McCord sent to Nicholas Maiale, chairman of the Pennsylvania SERS board on 4 December, 2013. Investigation work on the allegations has begun and is expected to be carried out of the next several months, according to the statement.

PA SERS announced a major overhaul of its alternatives programme in 2012, with the goal of reducing its exposure to the asset class from around 27 percent to 14 percent over a 10-year period. The system plans to achieve this goal by the natural unwinding of relationships rather than disposing of holdings on the secondary market. 

Last year, PA SERS committed to Nordic-focused FSN Capital’s Fund IV, US mid-market firm GTCR’s Fund XI and KPS Capital Partners’ KPS Special Situations Partners IV. The system also committed to the third loan fund managed by H.I.G. Capital credit affiliate, Bayside Capital, according to Private Equity International’s Research and Analytics division.

PA SERS’ total fund posted a return of 13.6 percent for the 2013 calendar year, up from 12 percent for the 2012 calendar year. The system has about $27 billion of assets under management, according to the statement.