Minnesota State Board of Investment, St. Paul, on Thursday approved commitments totaling up to $267 million to two private markets funds, as well as a commitment of up to $100 million to a real estate fund, said Mansco Perry III, executive director and chief investment officer.
The three commitments are subject to successful contract negotiations with the board, which oversees a total of $80 billion in state pension and other assets.
The board approved a €150 million ($167 million) commitment to IK VIII, a low- to midmarket European private equity growth fund managed by IK Investment Partners, and up to $100 million to LBC Credit Partners IV, a midmarket private senior loan fund.
The real estate commitment will go to the Rockwood Capital Real Estate Partners Fund X, a value-added fund.
The board has made a previous commitment to IK VII; the LBC and Rockwood commitments are the first by the board to those firms.
The board had 12.6% of its assets in alternative investments, including private equity, private debt and real estate, as of March 31. The rest of its allocation as of March 31 was 45.7% U.S. equity, 25.4% fixed income, 14.2% international equity and 2.1% cash.
Separately, the board approved changing its target allocations for the $60 billion in state retirement assets to 58% public equities, down from 60%, and 20% fixed income, up from 18%. Its 20% target to private markets and 2% to cash will remain the same. Its previous public equity allocation was 45% U.S. equities and 15% international stocks, but Mr. Perry said MSBI will look at the overall stock allocation as public equity to give it more flexibility in investing.
The target allocations will take effect July 1.
Minnesota Gov. Mark Dayton said at the board meeting that he was concerned about the performance of U.S. equities and suggested that board staff look at increasing its passive investments.
Also approved Thursday was the addition of the Fidelity Investments Diversified International Commingled Investment Trust and the T. Rowe Price Institutional Small-Cap Stock Fund as investment options in the $5.8 billion Minnesota Deferred Compensation Plan, St. Paul.
The 457 plan will also replace the Janus Twenty Fund with the Vanguard Group Dividend Growth Fund, although the Janus Twenty Fund will still be available through the plan’s self-directed brokerage window.
Last month, David Bergstrom, executive director of the $22 billion Minnesota State Retirement System, also of St. Paul, which administers the 457 plan, said the Janus fund had become “too volatile and concentrated,” but he added that performance was not an issue.
With the changes, the plan will have 13 core investment options, a suite of target-date funds managed by State Street Global Advisors and a self-directed brokerage window run by TD Ameritrade.
