The Pennsylvania State Employees’ Retirement System’s private equity portfolio outperformed all other asset classes in 2010, returning 18.3 percent for the year and 6.7 percent in the fourth quarter.
The $25.5 billion system’s total performance for the year reached 11.9 percent, beating its 8 percent long-term assumed rate of return required to pay out benefits to members. It is the twelfth time in the last 16 years that the fund has outperformed its actuarially assumed rate of return. Total earnings for calendar year 2010, excluding fourth quarter earnings for alternatives and real estate which have not yet been reported, totaled $2.7 billion.
“The Fund is continuing to benefit greatly from its adherence to a long-term investment programme and prudently diversified asset allocation,” acting chief investment officer Thomas Brier said in a statement. “[T]he third and fourth quarters of 2010 made up the bulk of the year’s returns,” he added.
PA SERS’ venture capital portfolio returned 8.3 percent in 2010 and 3.4 percent in the fourth quarter. Global stocks and US stocks reported the best performance after private equity for the system last year, earning 18.2 percent and 18 percent, respectively.
Recent follow-on investments from the system include a commitment of up to $30 million to ABRY Partners VII and up to $10 million to Guggenheim Technology Ventures II. ABRY Partners VII, which has a target of $1.6 billion, is expected to close on 29 April above target, a limited partner source told PEI.
Pennsylvania’s board also approved an up to $15 million real estate commitment to BPG Investment Partnership IX. All three commitments are subject to contract negotiations.