Nebraska weighs new private debt allocation

The Cornhusker State pension fund’s total assets hit nearly $25bn with returns of 4.61% in the first quarter.

The Nebraska Investment Council is considering adding a specific private credit bucket of 5 percent to its portfolio, according to meeting materials.

The Lincoln, Nebraska-based public pension plan heard a recommendation from investment consultant Aon Hewitt to set aside a specific part of its fund for the asset class at its 27 July meeting.

However, the board did not vote on the recommendation or make any investment-related decisions last week’s meeting, Michael Walden-Newman, state investment officer at NIC, wrote in an email statement.

NIC did approve an extension of its contract with Aon Hewitt, which has served as an investment consultant since 2004 and advised the board up its private credit investments.

The pension fund was not immediately available to comment further about the recommendation or if the board will take up the issue at its next meeting.

The recommendation called on NIC to revamp its portfolio allocation to enhance long-term returns and reduce portfolio volatility.

“Given existing market conditions, meeting or exceeding the assumed rate of 7.5% is likely to prove challenging,” the document continued. The recommendation cited private credit as “worthy of consideration”. 

Although a bucket focused exclusively on private credit would be new for the firm, NIC has previously made credit commitments, included in its real estate and private equity allocations.

The state pension plan has a $40 million commitment to Torchlight Debt Opportunities Fund V, a $25 million commitment to Wayzata Opportunities Fund III and a $15 million commitment to Ares Mezzanine Partners fund, according to PDI data.

NIC’s total assets hit $24.67 billion as of 31 March, marking an increase of $1.6 billion from the end of the previous quarter, the firm’s first quarter performance report showed. The total fund showed returns of 4.61 percent and 11.85 percent the first quarter and year ending 31 March, respectively.