Searches and Hires

N.Y. State Teachers commits $600 million to co-investments, lowers assumed rate of return

The governing board of the New York State Teachers' Retirement System, Albany, approved a $600 million private equity commitment and voted to cut the assumed rate of return to 7.25% from 7.50%, effective July 1, 2018.

The board approved the private equity commitment to HarbourVest/Maple Fund, managed by HarbourVest Partners, to be apportioned over three years at $200 million per year.

It is a separate account, "which will seek both active and passive co-investment opportunities from a subset of New York State Teachers' Retirement System's private equity managers," John Cardillo, a spokesman for the $115.6 billion pension fund, said in an email.

The board chose the separate account approach for its "ability to generate additional deal flows with New York State Teachers' Retirement System's best managers in an efficient and cost-effective manner," Mr. Cardillo wrote. The action is "consistent with our strategic plan for the private equity portfolio."

The pension fund has invested a total of $1.4 billion in 11 HarbourVest funds since 2000, he wrote.

The private equity commitment was among several actions taken at the quarterly meeting in Albany on Thursday.

The board's cutting the assumed rate of return "is more consistent with future expectations," Mr. Cardillo wrote.

The 7.25% rate will be used for the pension fund's June 30, 2017, actuarial evaluation, he wrote. For the June 30, 2016, actuarial evaluation, the funding ratio was 97.9% using the actuarial value of assets and 98.4% using the market value of assets, he wrote.

The pension fund also reported it returned a net 12.5% for the fiscal year ended June 30. The return for the quarter ended June 30 was 3.13%.

The three-year annualized return was 6.6%; five years, 10.23%; and 10 years, 5.59%.

The $115.6 billion in assets as of June 30 represents a 7.5% increase for the year.

The board also approved one-year renewals of contracts for Aon Hewitt Investment Consulting as investment consultant and for Callan as real estate consultant. The renewed contracts take effect Feb. 1.