New York State Teachers’ Retirement System, Albany, hired Goldman Sachs Asset Management at its Wednesday board meeting to run $250 million in global fixed income, subject to the completion of due diligence.
GSAM will manage a global aggregate fixed-income allocation benchmarked to the Barclay’s Capital Global Aggregate Float Adjusted Bond index, said the board resolution approving the transaction.
Also, three private equity commitments that did not require board approval were reported at the meeting. The commitments, which closed during the quarter ended March 31, are:
- €100 million ($108.1 million) to Rhone Partners V, managed by Rhone Capital, which focuses on pan-European and transatlantic middle-market investments. The pension fund committed to a prior Rhone Capital fund.
- $70 million to Thoma Bravo Special Opportunities Fund II, which focuses on North American buyouts of software companies. The pension fund committed to three prior Thoma Bravo funds.
- €70 million to ICG Europe Fund VI, a mezzanine debt fund that focuses on midmarket European companies managed by Intermediate Capital Group. The pension fund previously committed to another ICG fund.
The board also voted to allocate up to an additional $200 million to Prima Capital Advisors to manage a separate account of commercial mortgage-backed securities and mezzanine loans. Prima Capital already manages $350 million for the pension fund in the strategy.
Separately, the board approved the creation of a new all-cap internally managed domestic equity fund that will eventually manage $1 billion for the $109.2 billion pension fund.
This actively managed all-cap disciplined equity strategy will be benchmarked against the S&P 1500 index.
“The staff has been working on this for about 18 months to come up with a more diversified portfolio to reduce risk,” said R. Michael Kraus, president of the governing board, in an interview after the board unanimously approved the new strategy.
“The objective is for a more active domestic equity portfolio,” said Frederick Herrmann, the pension fund’s managing director of public equities, in an interview after the board meeting.
Mr. Herrmann said the pension fund’s strategic plan calls for equities — both domestic and international — to be 75% passively managed and 25% actively managed. Currently, the passive assets account for about 82% of domestic equity and 81% of international equity.
The money for the new strategy will come from the pension fund’s passively managed domestic equity portfolio. The new strategy will be funded in two increments of $500 million each, but a precise timetable hasn’t been set, Mr. Herrmann said.
Currently, 93% of the domestic equity portfolio is internally managed and 0.4% of the international equity portfolio is internally managed.
