Minnesota State Board of Investment, St. Paul, on Wednesday approved committing up to a total of $600 million to five alternatives funds, subject to contract negotiations, said Mansco Perry III, the board’s executive director and chief investment officer.
Commitments of up to $150 million each were made to two funds by managers that currently run assets for the board, which oversees $80 billion in state pension and other assets.
The commitments are to Blackstone Strategic Partners VII, managed by Blackstone Group, a secondary fund with interests in mezzanine debt, distressed debt and venture capital; and Apax IX, a global buyout fund managed by Apax Partners that invests in the technology and health-care sectors.
The board has made commitments to Blackstone’s six previous Strategic Partners funds as well as to Apax VIII.
Commitments of up to $100 million each were also approved for three funds run by firms new to the board:
- AG Realty Fund IX, managed by Angelo Gordon & Co., which invests in distressed real estate;
- Rockpoint Real Estate Fund V, managed by Rockpoint Group, an opportunistic fund that targets office, multifamily and hospitality properties; and
- Carlyle Strategic Partners IV, a midmarket buyout fund managed by Carlyle Group that focuses on distressed U.S. and European companies.
The board had a $7 billion allocation to alternatives as of Dec. 31. The commitments were recommended by the board’s investment advisory committee at a meeting Feb. 16.
Separately, the board returned 2.9% on its overall investments in the fourth quarter and zero for 2015, compared to its custom benchmark returns of 2.9% and -0.1%, respectively.
Domestic equity returned 5.9% for the quarter and 0.3% for the year, vs. the benchmark Russell 3000’s 6.3% and 0.5%; international equity returned 3.8% and -2.9%, respectively, compared to the MSCI All-Country World ex-U.S. index’s 3.2% and -5.7%; and fixed income returned -0.3% and 0.7%, compared to the Barclays Capital Aggregate U.S. Bond index’s -0.6% and 0.5%.
Alternatives returned -1.9% for the quarter and 1.4% for the 12 months, both ended Dec. 31.
The board’s current asset allocation is 45.8% domestic stocks, 25.2% fixed income, 14.1% international stocks, 13% alternatives and the remainder in cash.