Georgia Gov. Nathan Deal signed legislation allowing most of the state's public pension funds to invest in alternatives.
The Employees' Retirement System Enhanced Investment Authority Act, effective July 1, allows public retirement systems in the state — excluding the $48.1 billion Georgia Teachers' Retirement System, Atlanta — to “invest retirement system assets in certain types of alternative investments, private placements, and other private investments.” The teachers' system was not included because its board has not addressed the legislation.
The bill was signed by Mr. Deal on Monday.
The pension funds will be able to invest of up to 5% of their assets in alternative investments run by firms with at least $100 million in assets under management. The funds may invest up to 1% every year for five years until they reach the total maximum allowed by the law.
“We view that as another opportunity for our investment professionals to diversify the portfolio to the extent they deem necessary and from that standpoint. we're definitely pleased,” James A. Potvin, executive director of the $13.8 billion Georgia Employees' Retirement System, Atlanta, said in a telephone interview.
Mr. Potvin said that investment staff will take a measured approach to educating themselves. Because the system has not been permitted to make these types of investments, “this is not something we have a lot of institutional experience with,” he said.
“They're going to work to build their own knowledge,” he said, possibly bringing in some experts for education. “Once (investment staff) reach the point they will be comfortable at that level, they will discuss who they're going to take on and where the investments are going to go,” said Mr. Potvin.
Similar legislation was passed by the state Senate in 2006 and 2007 but did not make it past the state House. A unanimous vote by Georgia Employees' trustees in December to recommend revisiting the legislation led to the reintroduction of the bill.