PSERS lowers private markets allocation target

The $53bn US pension has raised its credit investments target against a drop in its real estate and private markets allocations, which includes private equity investments.

Pennsylvania Public School Employees’ Retirement System has increased its private credit allotment amid decreased in private markets and real estate, board documents showed.

PSERS’ board approved during its September meeting a recommendation to drop its private markets target allocation to 15 percent of its portfolio from 16 percent. It raised its credit-related investments target to 11 percent from 9 percent, citing opportunities in private debt as driving the decision.

“The reduction to private markets and real estate are consistent with the long-term target allocation…while the increase in the credit-related asset class is considered to be an enhancement to the current target allocation due to the on-going relative attractiveness of private debt investment opportunities identified by the staff,” the resolution read.

PSERS’ private markets portfolio, which includes private equity investments, totaled $7.67 billion or 14.9 percent of the pension plan’s total portfolio as of 31 March. Real estate totalled $5.91 billion or 11.5 percent of the PSERS total portfolio as of the end of first quarter.

The pension’s recent investments include $150 million to Bain Capital Fund XII, $200 million to New Mountain Partners V and $250 million to Apollo Investment Fund IX, according to PEI data.

PSERS’ total portfolio earned returns, net of fees, of 12.7 percent for the one-year period ending 31 March; 5.7 percent for the three-year period ending that date; 7.1 percent over five years and 4.2 percent for the 10 years.