Oregon Investment Council, Tigard, which runs the $74.2 billion Oregon Public Employees Retirement Fund, committed $900 million to alternative investment funds at its meeting on Wednesday, said James Sinks, spokesman.
The council committed $500 million to J.P. Morgan Asset Management (JPM)'s systematic alpha strategy, which allocates to investment styles or factors that historically have been a source of excess return as well as diversification. The council will make an initial $250 million commitment to the strategy, with additional commitments at staff's discretion. J.P. Morgan Asset Management is a new relationship.
The council also committed $400 million to Stonepeak Infrastructure Fund III, managed by Stonepeak Infrastructure Partners. The fund would invest in U.S. and Canadian lower- to middle-market infrastructure projects, focusing on power, water, energy, communications, renewables and transportation. The council have invested with Stonepeak in the past, including $400 million to Stonepeak Infrastructure Fund II.
In other news, the council committed $250 million to private equity fund Palladium Equity Partners V, according to minutes from the Aug. 9 council meeting. The pension fund committed $100 million to Palladium Equity Partners IV in 2012.
Also, the council terminated two real estate investment trust managers: EII Capital Management, which manages $82.3 million in a global REIT, and Morgan Stanley (MS) Investment Management, which manages a $442.7 million global REIT. Both managers ran ex-U.S. strategies. They were terminated as part of the council's efforts to bring its REIT portfolio within policy ranges. Last year, the REIT target range was reduced to zero to 10% of the real estate allocation from 15% to 25%. The council is transitioning its REIT mandate to core real estate. The pension plan has 11.1% invested in real estate as of June 30 and a 12.5% interim policy target allocation to real estate.
Separately, the council hired AllianceBernstein (AB) to design and manage the glidepath for a new set of target-date funds for its individual account program, an $8.2 billion defined contribution plan that invests alongside the state's defined benefit plan. The addition of target-date funds to the program was approved in August. The council also approved AB's glidepath and proposal for 10 target-date funds. AllianceBernstein already manages a $1.6 billion core fixed-income portfolio and $1 billion global equity portfolio.
The council also hired State Street Global Advisors to manage index strategies for the individual account program's target-date funds. SSGA would manage $670 million in a Russell 3000 index fund, $410 million in a MSCI ACWI ex-U.S. IMI index fund, $360 million in a Bloomberg Barclays Aggregate Bond index fund, $150 million in a 1-to-10 year U.S. Treasury inflation-protected securities fund and $110 million in a Bloomberg Barclays 1-to-3 year government credit index fund.