Private markets delivers 10% year-to-date at PSERS

The $53bn US pension posted a first-quarter return of 2.51% for an allocation covering private debt, private equity and venture capital.

Harrisburg-based Pennsylvania Public School Employees’ Retirement System (PSERS) has posted first-quarter 2017 performance figures showing that an allocation comprising private debt, private equity and venture capital delivered a return (net of fees) of 2.51 percent in the first three months.

The same allocation is currently delivering: 9.86 percent for the fiscal year to date (ending 30 June); 11.47 percent over one year; 6.41 percent over three years; 9.24 percent over five years; and 7.90 percent over 10 years.

The private markets allocation accounts for $7.7 billion (14.9 percent) of PSERS’ total net assets of $52.7 billion. The total fund delivered a return of 3.26 percent for the first quarter and is delivering 8.42 percent for the fiscal year to date.

The private markets allocation has been at or around its current level since 2014. In each year between 2010 and 2013, the allocation was just over 20 percent of the fund total.

Having been in existence since 1960, PSERS’ investment portfolio peaked at $67.2 billion in June 2007. Following the financial crisis, its value tumbled to $43.1 billion in June 2009, but has been recovering since.

In March this year, PSERS announced it was putting out a Request for Proposals (RFP) for a private markets consultant to review investment objectives, policies and asset allocation for its private markets bucket. The successful party will win a five-year engagement and prepare one-, three- and 10-year investment plans by 1 February each year.

PSERS is currently committed to 13 private debt fund managers including Apollo Global Management, Avenue Capital Group, Cerberus Capital Management, GoldPoint Partners and Oaktree Capital Management.

The pension made a $200 million commitment to Apollo Global Management’s 2016-vintage European Principal Finance Fund III.

The private markets allocation also comprises 44 private equity fund managers and 18 venture capital fund managers.