Largest pension plan in system posts 12.9% fiscal-year return
Michigan Department of Treasury, Bureau of Investments, committed a total of $1.1 billion to 12 private investment strategies in the quarter ended June 30 on behalf of the $58.7 billion Michigan Retirement Systems, East Lansing.
The pension fund committed a total of $490 million to three natural resources co-investments from the real return and opportunistic portfolio.
It committed $440 million to Lakewater III — $240 million as credit co-investment and $200 million as an equity co-investment — managed by Barings.
The system committed $250 million to Lakewater LLC Series V – Global Resources strategy in 2015. The fund was managed by Woodcreek Capital Management, which now falls under the Barings name.
Officials also committed $50 million to Orion Mine Finance Co-Fund II, a co-investment associated with Orion Mine Finance II, to which the system committed $50 million in 2016. The funds are managed by Orion Resource Partners.
In private equity, a total of $467.5 million was committed to five buyout funds: $150 million to CVC Capital Partners VII; $100 million each to Apollo Investment Fund IX, managed by Apollo Global Management, and KKR Asian Fund III, managed by KKR & Co.; $67.5 million to Silver Lake Partners V; and $50 million to Vista Equity Endeavor Fund I, managed by Vista Equity Partners.
Investment officials also committed $7 million to venture capital fund Menlo Ventures XIV.
A total of $130 million was allocated to three strategies from the system's real estate and infrastructure portfolio.
In real estate, $50 million each went to Avanath Affordable Housing III, managed by Avanath Capital Management, and Rialto Real Estate Fund III-Property, run by Rialto Capital Management.
ASF VII Infrastructure (Fund B), managed by Ardian, received a $30 million commitment for investment in global infrastructure secondary shares.
Separately, investment performance of the Michigan Public School Employees Retirement System, the largest of the four defined benefit plans managed by the investment bureau with $45.6 billion in assets, was 12.9% for the year ended June 30; 6.8%, three years; 10.2%, five years; and 5.7% for 10 years. Returns of the fund's internal benchmark were 13.5%, 7.5%, 10.4% and 6.1%, respectively, for the same time periods. Returns are gross of fees and multiyear returns are annualized.
The actual asset allocation of MPSERS as of June 30 was U.S. equity, 26.5% (target, 27%); international equity, 17.8% (16%); private equity, 14.6% (16.5%); core U.S. fixed income, 12.6% (12%); real estate/infrastructure, 9.8% (10.5%); real return/opportunistic, 9% (9%); hedge funds, 6.2% (6%); and cash, 3.5% (3%).