Indiana Public Retirement System, Indianapolis, invested or committed $1.5 billion and terminated or partially redeemed $1.2 billion from the state's $30.2 billion public defined benefit plan from Jan. 1 to May 31.
The changes result from investment staff rebalancing, making structural portfolio changes in some asset classes and committing assets to alternative investment strategies to meet calendar-year pacing plan targets, according to the investment report from the fund's June 26 board meeting, conducted remotely.
INPRS' staff generally does not provide reasons for commitments, hires, redemptions and terminations made between board meeting in the investment report provided to the system's trustees.
From INPRS' $3.3 billion private equity portfolio, the largest commitment was a total of $105 million to Francisco Partners, a new manager for INPRS. The investment team committed $75 million to Francisco Partners VI and $30 million to Francisco Partners Agility II. Both middle-market buyout funds focus on investments in technology companies in North America, Europe and Israel.
The remainder of INPRS' private equity investments went to existing managers, with $100 million to Vista Foundation Fund IV, run by Vista Equity Partners Management. New Mountain Capital also received a total commitment of $100 million, with $75 million for New Mountain Strategic Equity Fund I. INPRS committed the remaining $25 million to companion fund NMSEF Co-Invest I.
INPRS committed €110 million ($123 million) to CVC Capital Partners VIII (A), which will search for companies mostly in Western Europe. MBK Partners Fund V received a $75 million commitment for investment in middle-market consumer, financial-services and media companies in China, South Korea and Japan.
INPRS' target allocation to private equity in 2020 is $625 million.
In private credit, INPRS' investment officers committed $100 million to a new fund — HPS Specialty Loan Fund V — from existing manager HPS Investment Partners. The senior direct-lending fund is focused on upper-middle market borrowers in the U.S. Western Europe and Australia.
The fund's target allocation to private credit in 2020 is $500 million. The total invested in private credit as of May 31 was $432 million, the board's investment report showed.
To meet the system's 2020 real estate target commitment of $325 million, three existing managers received commitments to new funds, with $75 million to Abacus Multi-Family Partners Fund V. Abacus Capital Group's portfolio managers will acquire workforce-housing and middle-market multifamily properties in suburban markets.
From the defined benefit plan's $2.1 billion real estate portfolio, INPRS' staff also committed $50 million each to Exeter Property Group's Exeter Industrial Value Fund V and Related Cos.' Related Real Estate Fund III.
The Exeter fund's managers will make investments in U.S. industrial properties that can be enhanced through renovations and add-on development. The Related Cos.' Fund will acquire distressed and/or undermanaged properties at a discount and rehabilitates or repositions them into class-A properties.
As part of the ongoing shift to move more plan assets into passive strategies, INPRS' staff terminated Artisan Partners for $400 million in actively managed U.S. midcap value equities and moved the assets to existing manager RhumbLine Advisers for passive investment in a fund benchmarked to the Russell Mid Cap Value index.
INPRS had $3.8 billion invested in U.S. public equities as of May 31.
Changes also were made in the system's $3.1 billion hedge fund portfolio with $250 million invested with two new managers.
Kirkoswald Capital Partners was awarded $150 million for the Kirkoswald Global Macro Fund, and Mariner Partners received $100 million for investment in Mariner IDRV, a relative-value multistrategy fixed-income hedge fund.
Existing manager Hudson Structured Capital Management was given an additional $50 million for investment in HSCM Bermuda Fund, a reinsurance fund. With the new assets, Hudson Capital managed $153 million as of May 31 for INPRS.
INPRS took a partial redemption of $70 million from Oxford Asset Management's OxAm Quant fund, reducing the firm's allocation to $10 million. The fund is a diversified quantitatively managed hedge fund.
INPRS' investment staff redeemed all of the $91 million in Bridgewater Associates' Pure Alpha Major Markets Fund, a systematic global macro fund. Bridgewater continues to manage assets in other strategies for INPRS.
INPRS terminated First Quadrant for management of $122 million in the FQ Essential Beta fund from the system's $3.7 billion risk-parity portfolio.
Goldman Sachs Asset Management and CoreCommodity Management were terminated from the defined benefit plan's $2 billion commodities portfolio because the index was changed to the Bloomberg Commodity Total Return index, INPRS' staff told trustees in the investment report. Previously, the index was based on 50% S&P Goldman Sachs Commodity index and 50% the Bloomberg commodity index. Goldman was terminated for a $339 million commodity strategy and CoreCommodity was terminated for a $217 million account. Both managers continue to manage other strategies for INPRS.
Separately, INPRS' trustees approved rehiring Capital Cities as the consultant for the system's $5.7 billion defined contribution plan after a search that commenced in November 2019. Contract details have not yet been set, INPRS spokesman Jeffrey Hutson said in an email.
INPRS managed a total of $36.4 billion as of May 31. In addition to the $30.2 billion defined benefit plan and the $5.7 billion defined contribution plan, $498 million was managed in non-retirement funds.
