At Maryland pension, PE is strongest class, returning near 20 pct

  • Assets under management: $52 bln
  • PE target allocation: 13 pct
  • PE actual allocation: 12.3 pct
  • PE strategy: The pension fund makes bigger commitments to meet its target allocation
  • Whom to contact: Dana Johns, senior portfolio manager, at
  • Why this is important: LPs choose larger funds because of high PE target allocations

Maryland State Retirement & Pension System said that for the year ended June 30, 2018, private equity was its strongest performer, generating 19.64 percent.

Private equity returned 16.44 percent over one year, 13.15 percent over three years and 14.11 percent over five years for the period ended June 30, 2017, documents said.

The pension fund overall returned 8 percent on investments for the fiscal year ended June 30, 2018, exceeding the 7.5 percent assumed actuarial return rate.

Maryland’s $5.9 billion PE portfolio is spread over almost 95 GPs and 200 funds, said Dana Johns, senior portfolio manager at MSRPS, on a panel at Buyouts Insider’s Emerging Manager Connect conference in New York last month.

The pension system’s private equity program has a target allocation of 13 percent, and was at 12.3 percent, as of March 31, 2018, documents showed.

Due to the 13 percent PE target allocation in the Maryland pension system, the minimum allocation to fund managers is $75 million, Johns said.

MSRPS doubled its PE commitments to $2.8 billion across 20 funds in 2017, from $1.4 billion across 17 funds in 2016.

Recent commitments have gone to Bain Capital, Clayton Dubilier & Rice, CVC Capital Partners and New Mountain Capital, pension documents showed.

While the pension system’s PE strategies include buyouts, growth equity, venture capital, secondaries and funds of funds, the portfolio is dominated by buyouts, focused on U.S., Europe and Asia, Johns said.

The pension system also selects sector-focused funds for potential alpha generation, she said.

Maryland’s private equity team includes four investment professionals and manages the large PE portfolio, with assistance from Pavilion Advisory Group, its PE consultant, Johns said.

Action Item: Maryland’s retirement system: