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Pension Funds

Texas Employees targets $5.6 billion to private equity over next 5 years

Texas Employees Retirement System, Austin, approved a private equity pacing plan that targets commitments of $5.6 billion to the asset class during the five fiscal years beginning Sept. 1 and ending Aug. 31, 2023, during a board meeting Wednesday.

In a report to the board, investment officers forecast that the yearly average commitment to private equity over the five-year period will be $1.12 billion.

The $28.3 billion pension plan committed $868 million to private equity in the fiscal year ended Aug. 31, 2017, and is on track to commit $757 million in the current fiscal year.

"The current proposed pacing plan projects ERS to maintain a constant allocation of 12% to 14.5% over the next five years of the program while incorporating a consistent level of annual commitments," ERS managers said in the report.

The newly approved pacing schedule includes an investment range for each year — from $750 million to $1.25 billion for fiscal year 2019, for example, to "provide a degree of flexibility to accommodate varying market opportunities and resources available to ERS," according to the report.

The market value of the fund's private equity portfolio was $3.8 billion as of June 30, or 13.4%, slightly above the plan's current 13% target to the asset class, meeting documents showed.