Illinois Municipal pledges up to $275 million to 5 managers

Illinois Municipal Retirement Fund, Oak Brook, on Friday committed a total of up to $275 million to real estate, private equity and venture capital funds.

In real estate, up to $100 million was committed to Blackstone Real Estate Partners Asia II and up to $50 million to Dune Real Estate Fund IV, managed by Dune Real Estate Partners.

The Blackstone Group fund invests in opportunistic Asia-Pacific properties, while Dune focuses on deep value distressed U.S. real estate, according to a presentation by Dhvani Shah, chief investment officer of the $36.2 billion pension fund, made to the board's investment committee on Thursday.

IMRF previously committed $100 million to Blackstone Real Estate Partners Asia and a total of $350 million to four other Blackstone real estate funds. The pension fund has committed a combined $75 million to two previous Dune funds.

The pension fund made private equity commitments of up to $75 million to Valor Equity Partners Fund IV, which invests in consumer, manufacturing and services firms, and up to $35 million to ICV Partners IV, a lower midmarket fund.

Valor and ICV are both minority-owned firms.

IMRF previously committed $5 million to a previous Valor fund and $20 million directly to ICV Partners Fund III and another $10 million through the pension fund's emerging managers of managers, Abbott Capital Management and Pantheon Ventures.

Also, the pension fund committed up to $15 million to Lightspeed Special Projects Vehicle Fund I, a a venture capital fund managed by minority-owned Lightspeed Venture Partners. IMRF already has committed a total of $75 million to five other Lightspeed funds and a combined $11 million to six funds through Abbott Capital and Pantheon.

As of Dec. 31, Illinois Municipal had 5.5% invested in real estate and 3.7% in alternatives. Each asset class has an 8% target.

Also on Friday, the IMRF board approved terminating Ariel Capital Management, which manages $70 million in active U.S. microcap value equity, for performance. The portfolio will be gradually wound down at the discretion of Ms. Shah, and the assets will be moved to cash.

Officials at Ariel could not be reached for comment. Separately, the pension fund returned a net 8% on its investments in 2016 vs. its custom benchmark's 7.5% return. A preliminary report at the fund board's Feb. 27 said the board had returned 7.9% for the year.

As of Dec. 31, the pension fund returned 4.84% over three years, 9.54% over five years and 6.14% for 10 years, all annualized. Respective benchmark returns were 5.53%, 8.83% and 5.99%.

For the year, U.S. equity returned 12.62% vs. its 12.74% benchmark; international equity, 3.54% vs. 4.5% benchmark; fixed income, 4.85% vs. 2.65%; real estate, 8.79% vs. 7.79%; and alternatives, 5.43% vs. 9%.

The pension fund's actual asset allocation as of Dec. 31 was 43.5% U.S. equity, 28.3% fixed income, 18.7% international equity, 5.5% real estate, 3.7% alternatives and the remainder in cash. Its targets are 38% U.S. equity, 27% fixed income, 17% international equity, 9% alternatives, 8% real estate and the rest in cash.