The Employees Retirement System of Texas (ERST) has retained its target allocation to private equity while approving several significant changes to the pension’s asset mix.
The $23.1 billion (€15.7 billion) pension’s investment board voted yesterday to keep its nascent private equity program at its current eight percent target.
Through March of this year, ERST had only committed $274 million to the asset class, but is hoping to reach its projected target of $2.7 billion by 2013. The pension plans on making total commitments of at least $700 million over the next five years to meet that allocation, according to documents detailing ERST’s 2009 strategic private equity plan.
Within the asset class, ERST is eyeing a future allocation of 60 percent to buyout funds, 30 percent to special situations and debt funds and 10 percent to venture capital funds. Since launching the private equity allocation, ERST has committed to four funds: $69 million to TGG Management’s Southwest Opportunity Partners; $60 million to New Mountain Partners III; $100 million to Carlyle Partners V; and €33 million to Advent International GPE VI.
Indicating its increasing focus on the alternatives space, the ERST board also approved a major bump of its real estate allocation from two percent to eight percent. ERST launched its real estate allocation along with its private equity allocation last year, and currently has 1.78 percent of the total fund invested in the asset class.
Like many other institutional investors who have watched the public markets batter their equities portfolios in recent months, ERST opted to reduce its exposure to global equities to 45 percent from 59 percent last year. ERST also dropped its fixed income allocation to 33 percent from 39 percent.