Houston Police Officers' Pension System committed up to $55 million total to three alternatives funds, according to recently obtained minutes of the June and July board meetings.
The $3.8 billion pension plan committed up to $20 million each to Levine Leichtman Capital Partners V, a structured equity fund, and Sentinel Capital Partners V, a small- to middle-market buyout fund. It also committed up to $15 million to CBRE Special Situations Fund, an opportunistic real estate fund.
Separately, the pension plan returned 7.67% for the fiscal year ended June 30, well below the benchmark return of 12.11%. Alternatives were the largest source of underperformance, returning 3.39% compared to the benchmark return of 14.53%. Domestic equity returned 21.29%, 17 basis points below the benchmark, and international equity, 11.7%, 193 basis points below the benchmark.
Credit strategies returned 14.08%, nearly five percentage points above the benchmark, and fixed income returned 0.57%, 126 basis points above the benchmark.
The police system had a 44.9% allocation to alternatives as of June 30, followed by 16.78% fixed income, 16.2% domestic equity, 13.14% international equity, 8.45% credit and the rest in cash.
John Lawson, executive director, did not return a telephone call for additional information by press time.