Illinois Teachers' Retirement System trustees approved tactical investment plans to commit from $600 million to $800 million to private equity in fiscal year 2007. Trustees at the $36.8 billion plan on Tuesday also approved several subsector changes: buyout funds were increased to between 60% and 70% of the allocation, from 45%; venture capital was decreased to between 10% and 20%, from 35%; mezzanine funds were reduced to up to 5%, from 10%; and distressed debt remained unchanged at 10%. The board will also explore international real estate during fiscal 2007, which began July 1, although no specific allocation was set, said Eva Goltermann, public information officer for the Springfield-based fund.
As of March 31, the system had $1.3 billion, or 3.6% of total assets, in private equity, generating an annual return of 28.4%. The private equity target is 6%. The fund also had $4.1 billion, or 11% of total assets, in real estate, which returned 26.2% for the year. The real estate target is 14%, split roughly into 60% core and 40% specialty holdings.
The board annually approves tactical plans that are essentially blueprints for staff as they work toward target portfolio allocations in the two asset classes, Ms. Goltermann said.
Separately, trustees will interview finalists at their Nov. 2-3 board meeting in their searches for an active domestic large-cap growth equity manager to run $400 million and an active domestic small-cap to midcap equity manager to run $200 million, said Ms. Goltermann. Finalists have not been selected.
Also, consultant R.V. Kuhns presented preliminary findings as part of its ongoing asset allocation review, and final recommendations will be presented to the board at the Nov. 2-3 meeting, Ms. Goltermann said.
Remaining on watch for organizational concerns were: BlackRock, which manages $1.3 billion in core-plus fixed income; Boston Partners, $861 million in active domestic large-cap value equity; and Harris Associates, $507 million in active international equity. Remaining on the system's automatic watchlist for failing to meet preset benchmarks were: active domestic small-cap value equity managers Byram Capital Management, which manages $203 million, and LSV Asset Management, which manages $718 million; active domestic small-cap to midcap growth equity manager Delaware Investments, which manages $353 million; and active international equity managers INVESCO, which manages $1 billion, and Jarislowsky Fraser, which manages $468 million.