New York State Teachers calls on StepStone for private debt

New York State Teachers' Retirement System, Albany, committed $200 million to a private debt separate account managed by StepStone Group.

This is a new manager relationship for the $119.4 billion pension system, which "will be the sole investor in the fund," spokesman John Cardillo wrote in an email. "The focus will be on direct lending of senior secured, first lien loans to mid- to large-cap North American companies operating across many sectors."

The commitment was approved by the pension system's governing board Thursday.

The board also authorized Thomas Lee, the executive director and chief investment officer, to sign a contract with Bank of New York Mellon (BK) "to act as an agency securities lender for a portion of the system's public securities assets, subject to the satisfactory completion of due diligence," according to a notice on the pension system's website on Friday.

"Bank of New York Mellon was selected as the result of an RFI process," Mr. Cardillo wrote. "As with most investment management contracts, there is no set term. We will review the situation annually and if our experience with the agent is satisfactory, the contract will be renewed for another year."

The board also authorized the renewal of an agreement with J.P. Morgan Chase & Co. "to act as an agency securities lender for a portion of the system's public securities assets," for one year, the website said.

The firm "will continue to handle the domestic securities portfolios while the international and global securities portfolios will be transitioned to Bank of NY," Mr. Cardillo wrote.

The board approved four other renewals, each for one year, and each to take effect when the current contract expires.

The renewals are:

• Wellington Management to manage $1.1 billion in global fixed income, effective June 20.

• LSV Asset Management to manage $683.4 million in active international equity, effective July 25.

• Arrowstreet Capital to manage $602.9 million in active international equity, effective July 18.

• Adelante Capital Management to manage $538.6 million in real estate investment trusts and real estate operating companies, effective July 1.

The pension system's total return, net of fees, for the six months ended Dec. 31 was -4.17% vs. a benchmark of -4.26%, Mr. Cardillo wrote. The 10-year return, net of fees, was an annualized 9.39% vs. the assumed annual rate of return of 7.25%, he added.