Texas Teacher Retirement System, Austin, is reducing the pace of its overall commitment to private market alternative investments by 10.4% to $10.3 billion in 2017.
Trustees of the $137.9 billion fund were updated about anticipated 2017 commitments and actual commitment levels in 2016 to four private markets asset classes at a June 1 meeting.
Meeting documents showed:
- the $17.2 billion real assets portfolio will receive $2 billion in commitments in 2017, down 52.4% from $4.2 billion the previous year;
- the $17 billion private equity portfolio will get a $4.2 billion infusion, up 10.5% from $3.8 billion;
- about $1.6 billion is earmarked for commitment to the $8 billion strategic partnership network - private markets strategic portfolio, up 23.1%;
- the $2 billion strategic partnership network-private markets tactical portfolio will receive the same $1 billion commitment it did in the prior year; and
- the commitment to the $5.3 billion energy, natural resources and infrastructure portfolio will total $1.5 billion, up 25%.
TRS investment officers forecast better returns in private markets in 2017, noting in the report to trustees that “alpha has become increasingly important in this low-return environment … alpha creation is more achievable in illiquid, non-transparent private markets.”
Without providing specifics, the investment department said it will increase allocations to private equity, real assets, energy and reflationary investments “given attractive deal flow.” Staff stressed in its report that all increases will be within the fund's flexible investment ranges.