Alfie Crooks

While board members initially expressed enthusiasm for a “Plan A” that would increase allocation to private equity assets, concerns were brought forward regarding potential fees and liquidity constraints.

The fund will create a co-investment underwriting program focusing on private equity assets and increase its private equity commitments by 1 percentage point on a yearly basis.

CERS’s investment committee approved a new plan that would drop the retirement system’s allocation to private equity to 8% from 10%.

The write-down will not impact Alaska Permanent’s private equity strategy, a spokesperson told Buyouts.

The private equity asset's underperformance has created a 'drag' on the overall fund performance over the past year, with the fund’s total return amounting to 6% over that period.

The system set pacing for private equity commitments at a range of $550m-$1.05bn for the next fiscal year, making up a significant portion of its overall target commitment pace of $2.5bn-$4bn.

During discussions, the treasury committee said it would target GP-led secondaries deals.

The expanded focus would include co-investments in private real assets, private income strategies and unique strategies.

The decision comes as part of ERS Texas’ continued commitment to the private equity asset class, bumping its fiscal year 2024 target up $50m from last year’s $600m targeted commitment.

Despite the increased target, the pension system's private equity allocation remains overweight by 1.8%.