Oregon Investment Council, which oversees the $94.5 billion Oregon Public Employees Retirement System, Tigard, committed a total of $529 million to private markets strategies, said CIO Rex Kim at the council's Sept. 5 meeting.
Oregon Investment Council committed $150 million to Lotus Infrastructure Fund IV, an energy-focused infrastructure fund managed by Lotus Infrastructure Partners, and $110 million to Hammes Income & Growth Healthcare Fund, a U.S. open-end medical office core-plus real estate fund managed by Hammes Partners.
The council also committed $100 million on behalf of the pension fund and $10 million on behalf of the $2.4 billion Common School Fund to Sculptor Real Estate Fund V, an opportunistic real estate fund managed by Sculptor Capital Management. It committed €100 million ($109 million) to open-end core real-asset fund Harrison Street European Core and $50 million to an infrastructure co-investment sidecar vehicle, both managed by Harrison Street.
Separately, the council hired SageView Advisory Group as the new consultant for its 457 plan, the $3.4 billion Oregon Savings Growth Plan, following an RFP launched in March. The council started the search process because the contract of the plan’s prior consultant, Callan, was set to expire at the end of August, Kim said at the council meeting. SageView’s contract began Sept. 4.
In other news, the pension fund earned a 6% net return for the fiscal year ended June 30, underperforming its 11.2% benchmark.
Oregon Public Employees Retirement System underperformed its benchmark for all other time periods except for the three-year period in which it returned an annualized net 5.1% besting its 4.6% benchmark. The pension fund returned an annualized 8% in five-year period, below its 8.3% benchmark and returned annualized 7.3% for the 10-year period, underperforming its 7.8% benchmark.
OPERF has a 6.9% assumed rate of return.
Meketa Investment Group, the pension plan’s general investment consultant, blamed its underperformance on its overweight to private equity. As of June 30, OPERF had 28.4% in private equity above its 20% target allocation as well as the high part of its allocation range of 27.5%. OPERF’s $26.8 billion private equity portfolio also underperformed its benchmark in the one-year, five-year and 10-year periods. Recent private equity underperformance has resulted in trailing one-year, five-year and 10-year returns falling below the OPERF Policy benchmark. Private equity outperformed its benchmark in the three-years ended June 30.
OPERF’s largest asset class by target allocation is public equity with a 27.5% target allocation but an 18.5% actual allocation as of June 30. Rounding out its asset allocation, the pension fund had a 25% target and 18% actual allocation to fixed income, a 12.5% target and 13.8% actual allocation to real estate, a 7.5% target and 10.5% actual allocation to real assets, a 7.5% target and 5.2% actual allocation to diversifying assets, a 0% target and 2.9% actual allocation to opportunistic assets and a 0% target and 2.6% actual allocation to cash as of June 30.
