Angela Miller-May, now chief investment officer of the $49.5 billion Illinois Municipal Retirement System, Oak Brook, led the vanguard of pension plans investing in Africa.
In her prior post as CIO of the now $11.1 billion Chicago Public School Teachers' Pensions & Retirement Fund, she invested in African investment strategies. Asked why the teachers' fund initially invested in Africa, Ms. Miller-May said in a statement that "after the global financial crisis, we were in an economic environment with low returns and slow growth and CPF needed to search for strategies, sectors and geographies that offered growth opportunities."
In 2016, the fund's investment team "began to educate themselves on the investible opportunities in emerging markets, specifically Africa," Ms. Miller-May said.
Ms. Miller-May and the director made several trips to Africa through the Trump and Biden administrations' delegations, which continue today.
"It was on the first trip (to Africa) in 2017 that we understood the difference between the perceived risk and the realty of the vast opportunities that Africa held," she said.
"Investing in Africa is a perfect fit for an underfunded pension fund seeking yield and returns and a competent, qualified, African-based investment manager seeking access to capital," Ms. Miller-May said.
The Chicago teachers fund in 2019 invested a total of $20 million in two funds managed by firms that invested in diverse exposure across non-core countries and across pan-Africa, Ms. Miller-May said. The private equity funds are AFIG Fund II, managed by Advanced Finance and Development Partners LLP; and African Development Partners III, which is managed by London-based Development Partners International LLP. They remain as pension fund managers today.
Now at Illinois Municipal, Ms. Miller-May said in her email that "prior to recommending an investment (in Africa), we have to educate our board on the value proposition and risk of the investment strategy and geography inclusive of developed and emerging markets."
Carlton W. Lenoir Sr., current executive director of the Chicago teachers fund, said in an email that "since the 1990s, the fund has encouraged diversity and inclusion by providing opportunities to minorities, women and persons with disabilities to conduct business with the fund."
"We make investments with a long-term lens and at this point, it's too early in the life cycle to determine results," Mr. Lenoir said, adding "we know as that as Africa becomes integrated into global markets, Africa has long-term prospects for strong economic growth, driven by its demographics. We believe that the investments we have made will capitalize on those market forces."
Investment commitments in Africa tend to start small, said Mr. Newman of Stamford's pension plans.
For example, the $91.6 billion Massachusetts Pension Reserves Investment Management Board, Boston, "hasn't recently invested in a dedicated African-based fund," a PRIM spokesman said in an email.
However, through its emerging markets exposure — both equity and fixed income — PRIM has approximately $100 million, or approximately 0.1% of fund assets, invested African countries and companies, the spokesman said. He noted that PRIM's investment managers "have full discretion within approved investment guidelines to invest or not invest in African countries or companies."
Emerging markets has 85% of the world's population, 63% of the world's commodities, 77% of the land, 33% of the financial markets, and 42% of the world's GDP, yet institutional investors invest less than 5% of their allocation into the EM and less than 1% into Africa, according to Mr. Newman.
"Public pension plans are freighters in the ocean and they take time to shift course," said Mr. Newman, whose Stamford pension plan has yet to invest. But once set, "the trade routes established become long term and others will follow the path. Africa will produce long-term high-quality returns and meaningful impact."
This story has been updated.