Texas County & District Retirement System, Austin, will commit as much as $2 billion to private investment asset classes in 2017.
Trustees approved an investment pacing plan for the coming year that maintains the same overall allocations as the previous year during a board meeting Thursday.
In order to maintain the fund’s buildup into private equity, the 2017 budget for the asset class is $1 billion. The $25.6 billion pension fund committed $513 million thus far in 2016 from the $1 billion set aside, said Gabrielle Zadra, senior managing director at the fund’s consultant, Cliffwater, during the meeting. The private equity portfolio totaled approximately $2.8 billion as of June 30.
The board agreed to earmark $400 million each for the private real estate and direct lending portfolios in 2017. As of June 30, the portfolios totaled approximately $538 million and $417 million, respectively.
Distressed debt, which totaled about $553 million on June 30, has a $250 million allocation for the next calendar year.
Separately, trustees granted staff discretion to consider new and additional commitments to 21 alternative investment funds managed by existing mangers before the board next meets in April 2017. Staff will also consider an investment in hedge fund Boston Partners Global Long/Short Equity, which would be a new fund for the $6.2 billion hedge fund portfolio.
The dollar values have not been set for the new and additional investments, said Paul J. Williams, chief investment officer, during an interview. He stressed that staff may not decide to invest in all of the funds on the list trustees approved.
Also, the pension fund reported its annualized returns as of Sept. 30 topped those of the benchmark for longer-term periods, according to the investment report presented to trustees.
For three months, the fund returned 3.81% (benchmark, 3.94%); year-to-date, 5.61% (6.51%); one year, 7.22% (7.78%); five years, 8.83% (7.44%); 10 years, 5.29% (4.49%); and 20 years, 7.14% (6.19%).
For the 12-month period ended Sept. 30, public equity was the best-performing asset class with a return of 11.97%, followed by real assets, 11.56%. The poorest-performing asset classes for the period were hedge funds, 1.46%, and private equity, 5.88%.
Over 10 years, the highest returns came from high yield, 7.76%, and private equity, 5.68%, while hedge funds, 3.74%, and real assets, 4.66%, produced the lowest returns.