2 pension funds focusing on smaller private equity funds

State of Wisconsin Investment Board is investing in smaller private equity managers, said John A. Drake, senior investment officer, private equity, speaking on a panel Tuesday at The Pension Bridge Private Equity Exclusive conference in Chicago.

“I believe in being very selective,” Mr. Drake said. “Our peers have done large strategic accounts. We have been going down market.”

The Madison-based board, which oversees $104.1 billion in assets including the $94.6 billion of the Wisconsin Retirement System, is shifting to smaller funds — those between $500 million and $1 billion, he said. The pension fund generally makes 15 to 20 private equity commitments per year.

“We like the alignment of interests down there,” Mr. Drake said.

Dale Martin, director, illiquid alternatives, at the $4 billion Colorado Fire and Police Pension Association, Greenwood Village, speaking on the same panel, said his pension fund also is investing its relatively new 26% target to alternatives investments, including private equity, in smaller funds, including those as small as with $200 million in total capital.

Taking a different route Shawn M. Winnie, senior portfolio manager, alternative investments, State of Michigan Department of Treasury, Bureau of Investments, Lansing, said the bureau makes larger commitments, which pushes it into larger and larger funds. The Bureau manages the $54.8 billion State of Michigan Retirement Systems, Lansing.

He noted one reason for making larger commitments to a fewer number of managers is that it is harder to manage general partner relationships today than it was five years ago.

“There are more things to do in the funds ... more LP vs. GP conflict,” Mr. Winnie said. “This means staff attention is a real problem.”

Mr. Winnie has a seven-person unit.