Searches and Hires

Montana Board of Investments allocates $180 million to private equity, real estate

Pension funds return 8.8% for fiscal year

Montana Board of Investments, Helena, disclosed private equity and real estate commitments totaling $180 million in materials for its meeting this week.

The board, which oversees about $11.3 billion in assets for nine state pension funds, committed $50 million to Crescent Asia Consumer & Deep Value Fund II, a private equity fund managed by Crescent Capital Group and $40 million each to Axiom Asia V, a private equity fund of funds managed by Axiom Asia Private Capital, and buyout fund Blue Sage Capital III.

As of June 30, the board's actual allocation to private equity was 11.1%.

The board also committed $30 million to AG Realty Value Fund X, a value-added real estate fund managed by Angelo, Gordon & Co. and $20 million to Fidelity Real Estate High income Fund, a real estate fund managed by Fidelity Institutional Asset Management.

As of June 30, the board's actual allocation to real estate was 7.2%.

Separately, the nine pension funds the board oversees each posted a net return of about 8.8% for the fiscal year ended June 30. The pension funds each returned roughly an annualized net 7.5%, 8.8% and 6.8%, respectively, in the three, five and 10 years ended June 30. For the fiscal year ended June 30, 2017, the pension funds each returned about a net 14.8%.

The one-year returns were each 32 to 35 basis points below their benchmarks. The $5.7 billion Public Employees' Retirement System returned a net 8.84% for the fiscal year, below its benchmark of 9.18%, and the $4 billion Teachers' Retirement System returned a net 8.82% for the fiscal year, below its benchmark of 9.16%.

Among the entire consolidated pension pool, the highest-performing asset class was domestic equities, which returned a net 14.85% for the fiscal year ended June 30, slightly below its 14.93% benchmark. It was followed by international equities returning a net 8.1% (above its 7.75% benchmark), real estate at 7.61% (3.57%), natural resources at 3.13% (26.1%), Treasury inflation-protected securities at 1.51% (1.45%), high yield at 1.41% (2.62%), broad fixed income at 0.5% (-0.4%), mortgage-backed securities at 0.31% (0.15%), investment-grade credit at -0.34% (-0.4%) and U.S. Treasury and agency bonds at -0.7% (-0.76%).

As of June 30, the consolidated pension pool's actual allocation was 36.1% domestic equities, 17.9% international equities, 11.1% private equity, 8.4% U.S. Treasury and agency bonds, 7.2% real estate, 4.1% mortgage-backed securities, 3.5% investment-grade credit, 3.4% Treasury inflation-protected securities, 2.8% high yield, 2.4% natural resources, 1.8% cash and 1.3% broad fixed income.

Dana Chapman, office manager and board secretary, could not be immediately reached to provide further information.