Illinois Teachers' Retirement System, Springfield, invested or committed a total of $1.3 billion to nine investment strategies and terminated four traditional investment firms managing $1.1 billion, news from virtual investment committee and full board meetings Thursday and Friday showed.
The largest commitment from the $57.6 billion pension fund was $400 million to private equity specialist Adams Street Partners, a new manager for TRS.
The firm will evenly split the allocation between separately managed accounts that will invest in strategies managed by other private equity managers based in Europe and the Asia-Pacific region. TRS retains approval of Adams Street's recommended investments.
Greg Turk, TRS director of investments, told trustees during Thursday's investment committee meeting that TRS' relationship with Adams Street is a strategic partnership that will be "a big enhancement in how we go about trying to access best-of-breed (private equity) managers outside the U.S. We wanted a partner with proven alpha generation in Europe and Asia."
Mr. Turk added that through the partnership with the firm, the TRS private equity team expects "Adams Street to introduce us to larger firms they invest in that we might make our own direct investments with."
TRS investment officers have full investment discretion for manager commitments less than $300 million for private equity and requested trustee approval for the Adams Street commitment, which was granted.
Among smaller commitments for new private equity funds that did not need board approval from TRS' $7.5 billion private equity/venture capital portfolio was $100 million to existing manager Charlesbank Capital Partners. The commitment will be split, with $60 million earmarked for investment in Charlesbank Equity Fund X and $40 million to Charlesbank Equity Overage Fund X. The funds' managers will seek investments in U.S. middle-market companies in core sectors that include business services, health care, industrial and technology.
Charlesbank currently manages $12.5 million for TRS.
Existing private equity manager Grain Management received a $50 million commitment to Grain Communications Opportunity Fund III, a North American communications infrastructure fund.
Grain currently manages $74 million for the pension fund.
TRS also committed $50 million each to two new private equity managers.
The first commitment was to Insight Partners Opportunities Fund I, which will invest in growth-stage software, software-enabled services and internet businesses in the U.S.
The second new manager commitment is to Mill Point Capital Partners II, a buyout fund that will target lower-middle-market companies in North America in sectors including industrial, business services and information technology services.
TRS also committed $36 million to Scale Venture Partners Fund VII. The firm is an existing TRS venture capital manager and will seek investments in U.S. companies, including software solutions, cybersecurity cloud infrastructure and artificial intelligence applications.
Scale Venture Partners currently manages $63 million for TRS.
Existing TRS manager Brookfield Asset Management received a $100 million commitment from TRS' $8.6 billion real assets portfolio for investment in Brookfield Infrastructure Fund IV Renewable Power Sidecar-B Fund. The new fund is a companion fund of Brookfield Infrastructure Fund IV-B, to which TRS committed up to $250 million in June.
Brookfield currently manages $150 million for TRS.
From the retirement system's $15.7 billion global income portfolio, existing manager Northern Shipping Funds received an additional $50 million commitment to Northern Shipping Fund IV. The pension fund initially committed $75 million to the fund in 2019. The fund provides private equity and mezzanine financing debt to the shipping and energy sectors.
Northern Shipping Funds currently manages $125 million for TRS.
TRS investment officers also made changes within the system's $20.2 billion public equity portfolio.
Existing manager Acadian Asset Management was allocated $300 million for an emerging markets small-cap strategy. Acadian currently manages $1.2 billion for TRS. Funding for the new Acadian assignment came from the termination of Dimensional Fund Advisors, which managed $322 million in a similar strategy.
RhumbLine Advisers, an existing TRS manager, received a $204 million allocation for investment in its S&P 1000 smidcap value index strategy. RhumbLine currently manages $7.1 billion of TRS assets. Funding for RhumbLine's new equity allocation came from the termination of LSV Asset Management, which actively managed a similar strategy.
Other terminations from the equity portfolio were Matarin Capital Management for a $33 million actively managed U.S. small-cap core strategy and RhumbLine for management of a $562 million passively managed, multifactor U.S. large-cap core strategy.
Dimensional, LSV and Matarin no longer manage assets for TRS.
TRS officials did not say during the meeting where the assets terminated from Matarin and RhumbLine would be reinvested.
R. Stanley Rupnik, TRS' interim executive director and CIO, told trustees during the investment committee meeting that the terminations were "primarily for performance reasons," but he did not specify to which funds he was referring.
