Illinois pension fund starts FoFs strategy with $75m outlay

State Universities Retirement System of Illinois has committed $75m to AVP Partners’ fund of funds, marking the start of a new investment strategy in the sector.

The $14.6 billion State Universities Retirement System of Illinois (SURS) has committed $75 million to a fund of funds managed by Los Angeles-based American Value Partners Advisors (AVP Advisors) as part of a wider strategy to invest in the funds of funds sector.

According to a report by IPE Real Estate, the pension fund approved the commitment alongside Chicago’s Public School Teachers’ Pension and Retirement Fund and the Illinois Municipal Retirement Fund, which are expected to commit the same amount to the fund shortly.

The decision to invest with AVP Advisors, which was formed in 2005, comes after the three pension funds approved a strategy to invest in fund of fund vehicles in February. According to minutes of a meeting held by EnnisKnupp Global Real Estate, a consultant to the funds, in December, a beauty parade of fund sponsors was held which also included rival firms Franklin Templeton, Fairview Capital and Perennial.

SURS had approximately $14.6 billion in assets as of 30 June last year, 6 percent of which was allocated to real estate. Recent commitments also include $40 million to Dune Capital Management’s Dune Real Estate Fund II, which is targeting $1.25 billion in commitments and IRRs of between 18 percent and 22 percent. The fund targets opportunities primarily in North America as well as Europe.