LAFPP considers new private debt plan

Institution: Los Angeles Fire & Police Pension System
Headquarters: Los Angeles, US
AUM: $28.8 billion
Allocation to private debt: 0%

The Los Angeles Fire & Police Pension System is considering the approval of a new private debt plan as recommended by the pension funds investment consultant Stepstone.

In August 2020, the board voted to approve a 2 percent target allocation to private debt as a result of a asset allocation study. Subsequently, in January 2023 the LAFFP board hired Stepstone as its private debt consultant with the goal of creating new exposure to the asset class.

US pension funds have been increasingly drawn to the allure of private debt in a period of economic uncertainty, with the proposition of high yields and increased diversification of their portfolio making for an attractive proposition.

Stepstone’s suggested pacing plan would see LAFPP target $139 million in commitments for 2023, and $261 million in commitments for 2024. The pacing plan would aim to see LAFPP generating net cashflow by 2030.

The private debt plan would see LAFPP target a range of different private debt strategies, as noted in the table below.

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