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Illinois Municipal plans 20 pct allocation to minority, women-owned fund managers

  • “Aspirational goal” would put 20 pct of fund assets with such managers
  • New policy results rom law signed by Gov. Rauner, a former GTCR exec
  • $33.4 bln pension’s PE portfolio includes investments with Vista, RLJ

The Illinois Municipal Retirement Fund has set a lofty goal for hiring emerging investment managers, which the $33.4 billion retirement fund defines as firms owned and managed by minorities, women or people with disabilities.

The $33.4 billion retirement fund, responding to recent legislation, made it an “aspirational goal” to allocate at least 20 percent of its fund assets to such firms, according to a Dec. 18 announcement.

Many U.S. public pensions have diversified their roster of investment managers in recent years, typically by forming specialized allocations, separate accounts or by investing in funds of funds. But few, if any, have set target asset allocations as high as 20 percent.

The Illinois Municipal board amended its investment policy on Dec. 17 after Illinois Governor and former GTCR executive Bruce Rauner signed legislation into law earlier this year, spokesman John Krupa said in an email. The bill amended the state’s Business Enterprise for Minorities, Females and Persons with Disabilities Act by mandating state institutions aspire to allocate at least 20 percent of their investment assets to firms owned or managed by minorities, women, or individuals with disabilities.

The pension also acted on the guidance of the Illinois State Senate Special Committee on Pension Investments, according to the announcement.

“They’re a well-funded, well managed [pension] fund, but they have recognized that they need to be more diverse,” said Sen. Sue Rezin, who co-chairs the committee. “We want to make sure there’s a plan in place that puts us on a path to allowing opportunity to funds with diversity.”

Even with an amended investment policy, however, “the strategy hasn’t changed,” Krupa said. “IMRF has long utilized emerging/minority investment managers. The investment policy change sets measurable goals in regard to utilization.”

Krupa declined to say whether the retirement system plans to request investment proposals for new investment managers.

Illinois Municipal Retirement Fund’s alternatives portfolio includes commitments to private equity funds managed by Vista Equity Partners and RLJ Equity Partners, both of which qualified as emerging investment managers under the retirement system’s definition. The pension also invested in a fund of funds managed by Muller & Monroe Asset Management, which specializes in emerging managers and niche strategies.

The pension valued its alternatives portfolio at $1.5 billion as of Sept. 30. Its allocation to alternatives stood at 4.6 percent, roughly halfway toward its 9 percent target, as of the same date.

Action item: For more information on the investment portfolio, visit www.imrf.org