The $93bn system has operated with a growing private equity overweight for the last six years, after being dramatically affected by the denominator effect.
Schroders’ latest investor insights survey shows LPs widely expecting to allocate again to certain illiquid assets, above all private equity and credit. This reflects what the fund house is hearing from clients.
A smaller fund means smaller fees, which means potentially less capital to run the organization. And as firms grew over the past five to 10 years, they will face the choice of needing to invest more to continue growing.
SWIB says it expects to increase its private equity and debt commitment pacing to reduce the system’s excess liquidity.
The US state institution aims to invest more in private assets at the expense of its public market exposure.
Buyouts spoke with a spokesperson for the New Mexico State Investment Council to better understand its pacing and co-investment strategy.
The pension fund, which held its biweekly board meeting October 3, said that it would commit $750m to its private equity portfolio.
The sovereign wealth fund will likely have to increase its commitments to the asset class to $1.5bn in FY2025.
The pacing projections were set a week after the system’s investment committee approved a rebalancing of its funds' private equity target allocations.
Some curtailment of the scope of direct investing, and the reintroduction of fund investing, mark a fundamental shift from the past practice of an innovative Canadian institution.