New York State Teachers assigns $500 million, posts 9% return for fiscal year

New York State Teachers' Retirement System, Albany, made three private equity commitments and one private debt commitment totaling up to $500 million, according to a report issued Thursday by the $119.9 billion pension fund.

The report was presented during the quarterly meeting of the pension fund's governing board.

The private equity commitments are:

• Up to $200 million to the Thoma Bravo Fund XIII, which focuses on software and technology service companies. The pension fund has made commitments to five previous Thoma Bravo funds.


• Up to $100 million to TCV X, managed by Technology Crossover Ventures, which concentrates on late-stage, venture and growth companies in internet, software and other technology companies. The pension fund has committed to five other TCV funds.


• Up to $100 million total to Hahn & Co. III and Hahn & Co. III-S, described in an email from pension fund spokesman John Cardillo as making "control investments in the industrial, consumer, retail and transportations sectors" in South Korea. This is a new relationship.

The private debt commitment was made to ABRY Advanced Securities Fund IV, for up to $100 million. Managed by ABRY Partners, the fund invests in "senior bank loans in the media, information, communications, business services and related sectors," Mr. Cardillo wrote. The pension system previously made commitments to two other ABRY funds.

Each commitment was approved by Thomas Lee, the pension fund's executive director and chief investment officer, without a full board vote. The retirement system's rules allow the CIO to take action without a full board vote under certain circumstances.

Separately, at Thursday's meeting, the pension fund reported that the return on its investments for the fiscal year ended June 30 was 9% net of fees. The assumed rate of return had been 7.5%. It was reduced to 7.25%, effective July 1 this year. The net return for the fiscal year ended June 30, 2017, was 12.5%.

The annualized net return for the five years ended June 30 was 9.3%; 10 years, 7.2%; and 20 years, 6.6%.

The pension fund reported that the funded status as of June 30, was 101% according to market value of assets and 99% based on actuarial value of assets.

Also at the meeting, the pension fund's governing board approved a one-year extension of Aon Hewitt Investment Consulting's contract as general investment consultant.

The initial contract began Feb. 1, 2015. "Subject to annual review and performance evaluation, the contract could be renewed up to four times for periods of 12 months each," Mr. Cardillo wrote. "This renewal represents the last allowable under the terms of the agreement, with the contract scheduled to expire Jan. 31, 2020." The pension fund expects to issue a new general investment consultant RFP in mid-2019, he added.

The governing board also granted an extension to Callan Associates as its real estate consultant.

The initial contract began Feb. 1, 2014. "The prior year's renewal covered the 12-month term ending Jan. 31, 2019," Mr. Cardillo wrote. "Due to consolidations within the market space, the contract with Callan will be extended for an additional year — through Jan. 31, 2020 — and a new RFP will be issued in 2019."