SWIB eyes bump to PE allocation

The State of Wisconsin Investment Board wants to increase its private equity target allocation to 12 percent, up from its current 11 percent target, and the board of trustees will vote on the recommended asset allocation at the next meeting taking place on December 21.

The 2022 target allocation recommendations were presented at the meeting held November 23, where Chris Levell, partner at NEPC – a consultant to the SWIB, noted the portfolio’s strong PE performance.

“Private equity has seen strong, positive absolute returns in the one-year, five-year, 10-year benchmarks as well as year-to-date,” he said.

According to the Q3 investment performance report, private equity/debt performance net of fees as of Sept. 30, 2021 was at a net IRR of 49.39 percent, versus the benchmark of 46.29 percent at the one-year mark. For five years, it is returning 19.19 percent compared with the benchmark return of 16.19 percent; and at the 10-year mark, SWIB is returning 15.09 percent, above the benchmark of 12.88 percent.

SWIB is one of the nation’s only fully funded public employee retirement systems and is among the 10 largest public pension funds in the US.

The core fund – with PE as a component – has a net year-to-date IRR of 11.22 percent as of September 30, 2021 – above the benchmark of 10.63 percent. At the five-year mark, the core fund has a net IRR of 11.36 percent compared with the benchmark’s 10.79 percent and at the 10-year mark it has an IRR of 10.09 percent, above the benchmark return of 9.64 percent. The core fund also is valued at $130.6 billion.