Indiana Public Retirement System, Indianapolis, allocated a total of $250 million to private credit, real estate and a relative value hedge fund, according to a presentation at Friday's board meeting.
The $32.8 billion system committed $100 million to HPS Specialty Loan Institutional Fund 2016, managed by HPS Investment Partners, which focuses on special debt situations at North American companies. It also invested $100 million in hedge fund Tenaron Capital Management to run in relative value micro fixed income.
Also, $50 million was committed to real estate manager Noble Investment Group to run in a value-added hospitality and lodging portfolio, according to the presentation by Scott Davis, the system's chief investment officer.
As of Sept. 30, INPRS had 12.6% in private markets, 9.7% in absolute return and 6.4% in real estate. All are below the system's respective targets of 14%, 10% and 7%.
Mr. Davis told board members he's confident that INPRS can meet its long-term 6.75% rate of return assumption, but he warned that continued low cash rates could make hitting the return assumption over the next five to 10 years "difficult."
Currently, he said, INPRS' investments must return 5.95 percentage points above the U.S. 3-month Treasury bill's 10-year moving averages to meet its rate of return assumption, compared to an excess return over 1.5 percentage points that was required in 1997.
Also, Mr. Davis said the system's equity bias could mean a risk of future drawdowns. INPRS has 28% of assets invested in equities, he said, but 80% of its risk allocation is in equity.
Separately, INPRS' combined funded status for its nine retirement plans was 66.9% as of June 30, according to Nyhart, the system's actuarial consultant. That's slightly above the 66.1% reported as of June 30, 2016.
