Pennsylvania Public School Employees’ Retirement System, Harrisburg, announced an $822 million sale on the private equity secondary market and approved slight changes to three asset class targets.
The $77.4 billion pension fund’s investment staff announced the sale in an Oct. 25 news release.
The sale of the pension fund’s interests in 13 unidentified private equity funds closed on Sept. 30, according to the news release.
“PSERS periodically assesses market conditions,” said Benjamin Cotton, chief investment officer, in the news release. “This specific transaction was well priced from our perspective and facilitates adjustments to exposures within our private markets holdings.”
Cotton has previously aired his desire to lower the pension fund’s overall target to private investments.
"We're at 36% (actual) private allocation right now, but our target's 30%," he said in a Dec. 19 interview. "We'd like to take that down another 6% (to 24%). That sounds like a lot, or maybe it doesn't sound like a lot, but to get there takes a while because of the nature of the allocation."
Since the pension fund is overallocated, Cotton and his staff have moderated their commitment pacing accordingly until they reach the current 30% or slightly lower.
"I'd like to be slightly under target because you've got more flexibility to manage the portfolio with public assets than you do with private assets," Cotton said in the December interview, "but there is a role for both types of assets in the portfolio longer term."
As of June 30, the actual allocation to private equity was 16.1%, well overweight that asset class’s 12% target.
Separately, the pension fund’s board at its Oct. 25 meeting approved a slight increase in the target allocation to public equities to 32% from 30% and decreases in the targets to private real estate to 6% from 7% and public commodities to 4% from 5%.
A PennPSERS spokesman said the pension fund has no additional comment on the secondary sale or the asset allocation changes.
