Indiana Public Retirement System, Indianapolis, committed $100 million to Blackstone Property Partners, a real estate fund managed by Blackstone Real Estate Investors, and $75 million to Hellman & Friedman Capital Partners VIII, a private equity fund.
David Cooper, chief investment officer of the $29.9 billion pension fund, said Friday in a presentation to the INPRS board that the Blackstone fund will invest in a variety of U.S. commercial, industrial and residential properties, while the Hellman & Friedman fund will invest in financial, media, software, energy and health-care companies.
Separately, the pension fund returned -0.98% fiscal year-to-date through Oct. 31, vs. its custom benchmark's 0.9% return. Its fiscal year started July 1.
The pension fund's 7.8% commodities allocation returned -14.97% and its 23.8% global equity allocation returned -1.72% during the period.
Commodities “is an asset class that has really struggled,” Mr. Cooper said, noting that the pension fund's performance still was above its custom commodities benchmark return of -15.4% for the four months. Its global equity custom benchmark returned -0.26%.
Jeffrey MacLean, CEO of the pension fund's investment consultant Wurts & Associates, told the board that the decline in commodities has affected equity prices and that its non-U.S. investments have also been hurt by a strong U.S. dollar.
INPRS' 12.8% private equity allocation had the highest return for the four months, at 4.6%. Real estate, with 5.2% of assets, returned 3.58%; its 21.1% ex-inflation-linked fixed income gained 1.57%; 0.7% cash allocation, 0.32%; 8.6% absolute-return allocation, -0.2%; 9.9% inflation-linked fixed income allocation, -0.83%; and its 10.1% risk-parity portfolio, -2.01%.
The board also approved setting the rate for its internally managed annuity savings account at the 10-year Treasury bond rate plus 150 basis points from October 2015 until the end of 2016. The current rate is 5.75%.
The pension fund had wanted to hire an external provider to manage the account and set a market-based rate. But in April, Indiana Gov. Mike Pence signed legislation barring the hiring of an external provider until 2017 but allowing the retirement system to set a rate until then.
