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Montana commits $75 million to alternatives

(updated with correction)

Montana Board of Investments, Helena, committed $75 million total to four alternatives funds, said materials prepared for Wednesday's board meeting.

In private equity, investment staff committed $20 million each to buyout funds Angeles Equity Partners I; Audax Private Equity V, managed by Audax Group; and Gridiron Capital III.

In real estate, investment staff committed $15 million to PCCP Equity VII.

Also, for the fiscal year ended June 30, the board returned a net 4.58% for its pension funds with $10.1 billion in assets, said David Ewer, executive director. The custom benchmark was 5.15%.

Among the various asset classes, real estate returned 13.12%, 72 basis points above its benchmark; private equity, 8.44%; 810 basis points below its benchmark; domestic equity 7.35%, four basis points above its benchmark; fixed income 2.3%, 44 basis points above its benchmark; and international equity -4.21%, 76 basis points above its benchmark.

Real estate and private equity returns lag by one quarter. The private equity portfolio's benchmark (the S&P 1500 plus 400 basis points) is a “high bar” to beat and partially explains why the pension funds lagged their overall benchmarks, Mr. Ewer said.

At the end of June, the pension plans' asset allocation was 39.7% domestic equities, 22.3% fixed income, 16.6% international equities, 10.7% private equity, 8.8% real estate and 1.9% cash.