Iowa Public Employees’ Retirement System, Des Moines, authorized or is considering searches in four separate asset classes that could involve upward of $1.3 billion in assets total over the next year, according to a statement from Karl Koch, chief investment officer.
The $28.5 billion pension fund authorized Pathway Capital Management, its full discretion private equity fund-of-funds manager, to search for private equity partnerships to commit up to $800 million in 2017. Pathway has no plans to issue RFPs, but interested managers may contact Pathway for consideration. Pathway manages $3.3 billion for IPERS in existing investments and has $2.2 billion in existing commitments.
In addition for 2017, IPERS could commit $400 million to private credit strategies. IPERS’ staff is evaluating different approaches on implementation and has no plans to issue an RFP at this time.
IPERS could commit a combined $100 million to real estate, timberland and farmland managers. IPERS’ staff plans to review opportunities with its current managers in the three asset classes.
Also, IPERS is considering an allocation to smart beta equity strategies. The size of the allocation and other details were not available.
Separately, IPERS plans to issue an RFP for actuarial consulting services on Dec. 12. The contract with incumbent Cavanaugh MacDonald Consulting expires June 30. Under state statute, the services must be rebid. Cavanaugh MacDonald Consulting may rebid. IPERS plans to post the RFP on its website.
In other action, IPERS hired six managers for the first implementation of liquid absolute-return strategies, planning to fund each with $100 million in notional assets.
The pension fund hired Berenberg Asset Management, Graham Capital Management, Fort Investment Management, Informed Portfolio Management, Lynx Asset Management and P/E Investments.
They are part of a group of 10 liquid absolute-return managers IPERS selected in June as a result of an RFP issued in February. The other mangers selected but not funded were AQR Capital Management, Wadhwani Asset Management, Kaiser Trading Group and Quantmetrics Capital Management. IPERS plans to keep the unfunded managers in reserve for possible future funding as needed for manger replacement or program expansion.
The pension fund plans to have the liquid absolute-return strategies program function as an alpha overlay on its cash allocation. The move is IPERS’ first in the area.
Separately, the pension fund hired Parametric Portfolio Associates to provide asset allocation rebalancing, cash securitization and other beta overlay services. In addition, Parametric could be used for “implementing staff ideas on hedging, tactical positioning and other derivative strategies that IPERS may wish to execute from time to time,” according to the RFP issued in August for overlay mangers.
Also a 2016 actuarial valuation report presented by Cavanaugh MacDonald to the investment board showed the funding ratio of IPERS improved to 83.9% as of June 30, up from 83.7% a year earlier,.
Mr. Koch couldn’t be reached for further comment.
