September AW Investor Scorecard: Large pensions move forward with alts mandates

Five large institutional investors allocated more than $7 billion across infrastructure, private debt and private equity mandates across various managers and funds in September. Despite the uphill challenges of investor due diligence, large institutional investors made great strides after what has been a challenging fiscal year on a performance basis for many investment committees coming to terms with low single digit or negative returns. The largest allocation was Caisse de depot et placement du Quebec. The C$333 billion ($254 billion) Caisse de depot et placement du Quebec (CDPQ) has committed to expanding its investments within its infrastructure partnership with Dubai-based DP World through a $4.5 billion round of funding that will grow the group’s shared platform to $8.2 billion. The platform was set up by the pension fund and DP World in 2016 and will now also explore new investments in diversified and integrated supply chain support services. Currently, the investments include 10 port terminals globally and across various stages of the asset life cycle. When it comes to lending, the California Public Employees’ Retirement System trustees approved the creation of a 5% allocation to opportunistic strategies in June, and by the end of the month had already put $1 billion to work in the space. The heady pacing was questioned by trustees earlier this month during an investment committee meeting, where staffers outlined the exposures the portfolio would likely take on in the months to come as officials build up a private debt portfolio that is a cornerstone of the system’s so-called 7% solution -- or a way forward to hitting its assumed annualized rate of return on a consistent basis. “Our major initiative for next year is we want to continue deploy money to the private debt to ensure a robust and well-diversified portfolio,” Jean Hsu, interim managing investment director told trustees on September 15. Meanwhile on the East Coast of the U.S., the Pennsylvania Public School Employees’ Retirement System (PSERS), where trustees assigned allocations of $975 million across five new funds. “It was a wild quarter for private and institutional investors the world over and markets could remain volatile through the June 30 end of the fiscal year,” said PSERS Chief Investment Officer Jim Grossman. “We remain vigilant to market changes. Over a decade ago we re-structured our asset allocation in a way that would prevent the extremely high losses we experienced in the Great Recession, and we succeeded in that regard.” Officials at the $61 billion pension system also agreed to scrap the system’s risk parity program, which will result in the boosting of real asset exposure by 2% and equity exposure by 4% and fixed income by 6%. The managers of the risk parity program are BlackRock Institutional Trust Company; Bridgewater Associates; and D.E. Shaw Investment Management. Personnel changes are underway across the U.S. as well. At CalPERS, it was announced last month that Yup Kim will join from the Alaska Permanent Fund to become the $405 billion California pension’s new investment director in private equity. Meanwhile in Frankfort in Kentucky, the $18.7 billion Kentucky Retirement Systems announced plans to replace its executive director and deputy executive director of its investment office after both joined consulting firm AndCo on October 5. Below is a full listing of the institutional mandates reported by Alternatives Watch in September 2020. Source: Alternatives Watch

September AW Investor Scorecard: Large pensions move forward with alts mandates

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