Illinois Teachers' Retirement System, Springfield, will begin searches for private equity and real estate consultants this summer with an eye toward hiring firms at the end of 2019.
Trustees approved the searches at a board meeting Friday on the recommendation of R. Stanley Rupnik, chief investment officer, who said the $51.1 billion pension fund is required by Illinois state law to rebid contracts every five years.
The five-year contract of real estate consultant StepStone Real Estate expires in December, while the contract of the pension fund's private equity consultant, TorreyCove Capital Partners, expires in June 2020. Both firms may rebid.
Mr. Rupnik said the two RFPs will be posted on the pension fund's website at the same time because it's possible that one firm with consulting capability in both real estate and private equity might be selected.
During Friday's board meeting, trustees also approved hiring Cammack Retirement Group as the retirement system's first defined contribution plan consultant for a four-year contract, effective July 1.
Cammack will assist TRS staff in developing the system's first supplemental defined contribution plan, including design of the plan's investment lineup and will handle the search for a third-party administrator for the plan. The timing of the RFP for the plan administrator likely will be in late summer this year.
A 2018 Illinois state law mandated the establishment of the new defined contribution plan, which will require major changes to TRS' information technology systems. Illinois school districts currently report active member information such as salary and service time annually; the new DC plan will require school districts to send TRS the same information after each employee's paycheck.
TRS has set a tentative goal of launching the new defined contribution plan July 1, 2020.
Mr. Rupnik also reported to trustees at an investment committee meeting Thursday that the pension fund's investment staff invested or committed a total of $995 million to 10 investment managers between the end of February and the end of May.
The largest commitment was $300 million to existing manager Lone Star Funds' Lone Star Real Estate Fund VI. from the pension fund's $7.3 billion real estate portfolio. Lone Star currently is managing $154 million for the pension fund.
From TRS' $6.6 billion private equity portfolio, three existing managers received commitments to new buyout funds totaling $245 million:
• TRS private equity investment officers allocated $100 million was allocated to Trident VIII, managed by Stone Point Capital, which manages $229 million for the pension fund.
• TA XIII-A, managed by TA Associates, received a $95 million commitment to add to the $66 million the manager currently runs for TRS.
• Inflexion Private Equity Partners, which currently manages $1.8 million for the fund, received a commitment of £39 million ($50 million) to be invested equally in Inflexion Enterprise Fund V and Inflexion Supplemental Fund V.
TRS increased its investment in funds managed by three managers in the pension fund's $5.4 billion diversifying strategies portfolio, which includes hedge funds, managed futures and alternative risk premium strategies.
Graham Capital Management and Trend Capital Holdings each received an additional investment of $100 million, bringing the total each manager runs for TRS to about $202 million. Informed Portfolio Management received an additional $50 million, bringing its total managed for TRS to $247 million.
Mr. Rupnik also informed trustees that $218 million had been redeemed from Black Diamond Thematic, a hedge fund managed by Carlson Capital Management, but he did not provide a reason for the termination. Carlson continues to manage $170 million in its Double Black Diamond hedge fund for TRS.
Three managers running private credit funds received commitments totaling $200 million from the pension fund's $11.8 billion global income portfolio.
Existing manager Taurus Fund Management was awarded a $100 million commitment to Taurus Mining Finance Fund II. The firm currently managed $62 million for defined benefit plan. Existing manager Proterra Investment Partners received a commitment of $50 million for investment in Proterra Credit Fund. Proterra currently manages $68 million for the pension fund.
A new manager, Dignari Capital Partners, received a commitment of $50 million to DCP China Credit Fund II.
TRS trustees also approved a new asset allocation effective July 1. The pension fund undertakes a formal asset allocation every three years, with the next scheduled in 2020. Mr. Rupnik told trustees that the most recent change "confirms our long-term allocation."
The long-term target allocation for the diversifying assets portfolio was reduced to 10% from 14% with the difference going to the pension fund's global income portfolio, which rose to 21%.
Long-term target allocations remained unchanged for public equity (34%), private equity (15%), real assets (15%), opportunistic real estate (5%), and short-term investments (zero).