New Mexico State Investment Council, Santa Fe, adopted an investment plan for fiscal year 2023 that includes an increased focus on U.S.-based investments, while remaining cautious of the U.S. stock market, and continuing to find private alternatives for core bonds.
Its fiscal year 2023 investment plan calls for boosting U.S. investments, in part, because in times of economic stress, global investors tend to move toward the U.S., according to a report for the council's Sept. 27 meeting,
At the same time, the council will continue to be wary of the U.S. stock market given that "valuations are clearly very high," the report said.
The council will focus on private credit as a substitute for some core bond exposure because when there is less liquidity and deteriorating economic conditions, traditional sources of capital — banks and public markets — tend to pull back on the margins, the report said.
Council staff expect to commit about $900 million annually to private credit, compared to $516 million in fiscal year 2022.
The equity markets are "pretty weak right now," and the private markets, especially private equity,will also weaken in the next six to nine months, said Steven K. Moise, the state investment officer at the council meeting.
"We are still of a mind that we will head into a recession in the next couple of quarters," Mr. Moise said.
Also under the annual investment plan, the council expects to commit approximately $525 million to real estate and $600 million to $700 million to private equity in fiscal year 2023.
Separately, the council committed up to $150 Million to ICG Senior Debt Partners 5-D, a European middle market direct lending fund managed by Intermediate Capital Group and up to $75 million to JMI Equity Fund XI, a growth equity fund focusing on North American software companies.
