UC pension doubles PE returns

The investment committee said it must temper expectations for growth despite the recent strong performances.

University of California’s $61.6 billion retirement plan has more than doubled its private equity returns over the past year, according to its 2017 annual report.

UCRP generated 14 percent returns across $2.8 billion of private equity holdings for the fiscal year ended 30 June, up from 6.2 percent in 2016. The pension returned 14.4 percent overall, outperforming its 12.5 percent benchmark.

The university’s $10.8 billion endowment pool reported 21.1 percent returns on $1.2 billion of private equity over the period, a 6.7 percent increase from last year. The pool recorded a 14.8 percent return across all investments, up 2.6 percent on the benchmark.

“In general, we’re approaching this as a continued low-growth, low-return environment, and we have to temper our expectations accordingly,” Richard Sherman, chair of the UC investments subcommittee, said in a statement.

“We’re in uncharted territory and so in a place of extreme caution. We have to stay highly attuned to where our assets are deployed on a broad level and moderate our return expectations for our products.”

Recent commitments from the UC Regents Endowment Fund include $100 million to the $200 million Sebago Lake Joint Venture, a mid-market loan fund created in partnership with Owl Rock, and $85 million towards Column Group III, a $535 million biotech venture capital fund, according to Private Equity International data.

The university managed $109.8 billion in total assets as of June 30, with the remainder comprising $14.2 billion of working capital, a $22.3 billion retirement savings programme and the $0.9 billion Fiat Lux insurance company.