After completing its first asset allocation study in three years, the Indiana State Teachers? Retirement Fund has made its first-ever commitment to private equity. Under a new asset allocation plan adopted in April, the $6 billion system will allocate 5% of its actively managed assets, or $150 million, to private equity investments.
Portfolio Advisors, the plan?s Darien, Conn.-based investment advisor and portfolio manager, will split the pension fund?s investment capital into three types of private equity funds: leveraged buyout, special situation and venture capital funds. Portfolio Advisors already has made commitments to three private equity groups on Indiana?s behalf: The Blackstone Group, Cinvan and Warburg Pincus.
?Creating a strategy is an ongoing, continuing process and we?re looking to create a very diversified portfolio,? says Michael Galbreath, a managing director with Portfolio Advisors. ??We?ve just started. These are the funds in the market right now and these are the ones that looked good.?
Over a five-year to 10-year investment cycle, the pension plan is aiming for 15% returns, says Bob Newland, the Indianapolis-based pension plan?s chief investment officer.
Under its current asset allocation plan, the pension fund invests 40% of its portfolio in fixed income, 35% in domestic equity, 15% in international equity, 5% in private equity and 5% in real estate.
Carolina Braunschweig can be contacted at: Carolina.Braunschweig@tfn.com