Wisconsin projects $1 bln expansion of PE portfolio

  • Expansion to grow allocation to 9 pct of AUM from 8 pct
  • Co-investment, private debt viewed as priorities
  • PE portfolio beats short-, long-term benchmarks

State of Wisconsin Investment Boardexpects its private equity allocation to grow by as much as $1 billion over the next five years, a presentation included in its Oct. 19-20 meeting materials showed.

The increase would expand the pension’s PE portfolio to 9 percent of its assets under management from 8 percent, the report said. Wisconsin’s real estate portfolio will likely undergo a similar expansion, to 8 percent of AUM from 7 percent.

Wisconsin’s core trust fund had $7 billion of PE exposure as of July 31.

At least some of that $1 billion expansion will include building out co-investment and private debt capabilities, both of which are substrategies within Wisconsin’s PE portfolio.

Co-investment, in particular, became a bigger priority for Wisconsin over the past two years. The co-investment portfolio grew to $191 million since the program was launched in 2014, according to a June 30 portfolio summary. In Q2, Wisconsin inked three co-investments totaling $36.4 million of committed capital.

The pension’s PE portfolio netted a one-year return of 7.4 percent as of Sept. 30, surpassing the 1 percent return generated by its benchmark. Wisconsin’s private equity portfolio also exceeded its benchmark’s three-year, five-year and 10-year returns.

State of Wisconsin Investment Board’s core trust fund had $90 billion under management as of July 31, according to the report.

Action Item: State of Wisconsin Investment Board: www.swib.state.wi.us/