Montana considers raising private investment target

Investment staff expresses bullishness despite market volatility.

Montana Board of Investments may increase its allocation to private investments in a pool of money geared for the state’s nine public pension systems.

Many public systems face tough decisions with their private equity programs as they contend with overallocation issues and slowing distributions.

However, other public sector allocators remain bullish on private equity, considering its strong past returns and long-term outlook despite an economy facing multiple headwinds.

Montana’s investment staff wants to increase the midpoint of its private investment allocation from 15 percent to 16 percent, which would extend its allowed range from 12 percent to 20 percent. This recommendation was made at the system’s board meeting held on October 26.

Buyouts watched a webcast of this meeting.

Montana chief investment officer Jon Putnam said in a presentation to the board that he expects private investment to book higher returns compared with other asset classes.

“The board of investment has demonstrated an ability to successfully invest in private markets with long-term returns,” the presentation said.

The board will decide on the new asset allocation at its November meeting.

Investment staff met with adviser RVK to prepare its proposed new asset allocation, according to the presentation.

Montana would reduce its target allocations to domestic and international equity, according to the presentation. The system would also up its allocation to real assets and real estate.

Montana Board of Investments manages $24.7 billion across four investment pools, including one that manages investments for nine state pension plans. The pension plan pool has $13 billion in assets under management, according to Montana’s latest monthly report.

The pension pool is the only one with exposure to private investments and currently allocates 17.8 to the asset class, according to the report.