Texas Employees' Retirement System, Austin, will search for a high-yield manager this summer to replace Fountain Capital Management, which managed $261 million and closed in February, said Mary Jane Wardlow, a spokeswoman for the $25.9 billion pension fund.
A new long-only high-yield manager is slated to be hired by the end of the year. The size of the new allocation and the details of the RFP weren't available by press time.
Separately, the pension fund committed a total of $695 million to alternative investment strategies, direct investments and co-investments in the quarter ended March 31, materials from the pension fund's May 19 meeting showed.
In real estate, the pension fund committed an aggregate $300 million to four new funds: Rockpoint Real Estate Fund V, managed by Rockpoint Group, $100 million; $75 million each to BPE Asia Real Estate Fund and Waterton Residential Property Venture XII, managed by Waterton Associates; and U.S. Self-Storage Value Fund I, by Devon Self Storage Holdings, $50 million.
A total of $290 million was committed to private equity in the first quarter, meeting reports showed: KSL Capital Partners IV, $125 million; Carlyle Energy Mezzanine Opportunities Fund II, managed by Carlyle Group, $85 million; Frontier Fund IV, managed by Frontier Capital, $60 million; and “various co-investments,” $19.5 million.
ERS made two commitments to private infrastructure strategies in the first three months of 2015: ISQ Global Infrastructure Fund, managed by I Squared Capital, $75 million; and a $30 million direct investment in Glenfarne Asset Co., managed by Glenfarne Group.
Trustees also learned that the target allocation to private infrastructure was raised to 4% of total assets from 3%, with the additional percentage point coming from public infrastructure funds, meeting reports showed. The tactical plan for private infrastructure will commit a total of up to $1.65 billion through the end of the fiscal year Aug. 31, 2020.
The private real estate tactical plan will commit a total of up to $1.2 billion through the end of the 2019 fiscal year.
The board also learned of the pension fund's benchmark-topping returns for periods ended March 31: three months, 2.3% (benchmark, 1.9%); one year, 6.6% (benchmark, 5.9%); five years, 8.5% (benchmark, 8.3%); and 10 years, 6.6% (benchmark, 6.2%).
Separately, the Texas Legislature gave final approval Tuesday for a bill that would raise employee and state contributions to the ERS in order to bring the pension plan's funded status to 76.5% from 76.4%.
The bill hikes the employee contribution to 9.5% for every fiscal year starting with the one beginning Sept. 1, 2016, from 7.2% in 2016 and 7.5% in 2017. The contribution for members of the state Legislature will rise to 9.5% from 8% in fiscal year 2016. The legislation also increases the state's contribution to 10% from 8%.
The bill is headed to Gov. Greg Abbott's desk for his signature.
Ms. Wardlow said Texas ERS officials don't comment on legislation.