The PBGC committed $2.5 billion to three investment firms to serve as strategic partners and invest in private equity and real estate, said Charles E.F. Millard, director.
Separate commitments of $900 million each were made to BlackRock and JPMorgan and $700 million was given to Goldman Sachs Asset Management, said PBGC spokesman Jeffrey Speicher. He would not say how much each firm would run in private equity or real estate.
Mr. Millard said in an interview that the firms are providing the Pension Benefit Guaranty Corp. with advice on risk management, consolidated reporting and education of investment PBGC staff. Weve got all three firms meeting in the same room, giving us their best advice, Mr. Millard said.
The PBGC received 16 applications in response to an RFP issued July 31, Mr. Millard said. The search followed an asset allocation policy adopted in February that permits the agency to invest up to 10% of the $55 billion it has available for investment in private equity and real estate for the first time.
The new asset allocation is designed to help close the PBGCs $14 billion deficit over the next 10 to 20 years. Under the new policy, 45% of assets will be in equities, 45% in fixed income and 10% in alternatives. Previously, 75% to 85% was in fixed income in a strategy designed to better match assets with liabilities. The remainder of the portfolio was invested in stocks.