Los Angeles City Employees' Retirement System officials said the pension fund is moving to a consistent annual private equity commitment pace of $325 million to $350 million per year from a historically inconsistent commitment pace, starting in 2016, said agenda materials for Tuesday's board meeting.
The $13.2 billion pension fund has a 12% private equity allocation. A regular commitment pace would reduce volatility in future cash flows and help avoid overexposure to high-priced markets, said a report by LACERS' private equity consultant, Portfolio Advisors.
Separately, the pension fund returned a net 0.31% for the year and 8% annualized for the three-year period ended Dec. 31. It outperformed its policy benchmark by 70 basis points for the year and by 82 basis points for the three-year period.
The best performing asset class for the year ended Dec. 31 was private equity at 6.91%, outperforming its benchmark return of 3.51%. The worst performing asset class for the 12-month period was credit opportunities at -3.70%, underperforming its benchmark return of -2.49%.