The $19 billion
Unlike many other pensions, Iowa’s board does not approve individual commitments. Instead, its advisory firm,
Pathway Capital determines an appropriate commitment amount each calendar year via a model that uses assumptions about the investment and distribution pace of existing and future partnership investments, as well as the potential growth of the total pension fund. The model tries to align the commitment pace with that needed to allow the pension to achieve its 10 percent private equity target and to maintain the allocation within the allowed range of 7 percent to 13 percent.
The adviser initially recommended a maximum commitment amount of $481 million for 2010 and $500 million in future years, which would have maintained the private equity program within the allowed ranges, but above the 10 percent target, until the year 2021. The pension fund’s staff, however, felt it would be better to lower the amount to $400 million to try to bring the actual allocation closer to the target over the next five years. According to a pension fund document, this lower amount would still allow Pathway Capital to take advantage of high-quality opportunities while making a more concerted effort to work toward the 10 percent target.
According to the LP’s annual report, as of June 30, 2009, the private equity/debt portfolio represented an 11.6 percent allocation. All told the pension fund has committed $6.1 billion committed to 217 partnerships. During fiscal 2009, which ended June 30, the LP committed $456 million to 13 new partnerships.
Past commitments include $49 million to