Investor Base: First Responders

In January, Christopher Gonzales, the executive director and chief investment officer of the Houston Firefighters’ Relief and Retirement Fund’s, wrote an op-ed in Pensions & Investments praising the strong performance of the fund’s private equity portfolio. 

For the second year in a row, the retirement fund was among the best performers in the Private Equity Growth Capital Council’s top 10 pension funds by private equity returns, claiming the fourth place spot for its 13.6 percent annualised return over the last 10 years and 9.3 percent over five years. HFRRF also came in first out of 99 public pension funds for the same period in the Wilshire Trust Universe Comparison’s Report. 

The $3.5 billion pension fund has a target allocation to private equity of 12 percent and an actual allocation of 10.32 percent. Private equity funds in HFRRF’s portfolio include The Blackstone Group’s Fund VI, Industrial Growth Partners’ Fund IV and Lone Star Funds’ Fund VIII, according to Private Equity International’s Research and Analytics division.  

The strong performance generated by HFRRF can be traced back a small team of decision-makers. The fund’s 10-member board is comprised of five firefighters, one former firefighter, two citizen members, the city treasurer and a representative of the mayor. 

“Our members are firefighters who stand ready and willing to risk their lives to save yours and mine,” Gonzales wrote. “Together, our goal is simple: make the smartest investment decisions we can to maximise returns, control risk and meet our obligations to our members. Private equity investment is one critical tool we use to fulfil this mission.” 

Gonzales’ views on private equity are almost certainly shared by many other CIOs at pension funds that rely on private equity returns to meet their obligations to their members. However, it is rare for a CIO to voice his enthusiasm for private equity so voluntarily. 

“Private equity has consistently provided our fund with impressive rates of return year after year, and that is seen in our overall fund performance,” he wrote. “I’m proud of HFRRF’s stellar performance.” 

Here’s hoping more limited partners will start publicly giving credit where it’s due