PSERS ups private credit target allocation

The pension plan’s credit portfolio has cut the share of its portfolio reserved for real estate and private markets, which includes private equity investments.

 

The Pennsylvania Public School Employees’ Retirement System has increased its allotment to credit by 2 percent, board documents showed.

The PSERS board approved during its September meeting a recommendation to up its credit-related investments to 11 percent from 9 percent, citing opportunities in private debt as driving the decision.

“The increase in the credit-related asset class is considered to be an enhancement to the current target allocation due to the on-going relative attractiveness of private debt investment opportunities identified by the staff,” the resolution read. 

As of 31 March, the Harrisburg, Pennsylvania-based pension plan’s credit investment bucket comprised 9 percent, or $4.6 billion, of its total net assets of $52.7 billion.

Some of the largest private credit investments in the PSERS portfolio include a $200 million commitment to Hayfin Special Opportunities Fund II, $200 million to Apollo European Principal Finance Fund III and $150 million Galton Onshore Mortgage Recovery Fund IV, PDI data showed.

PSERS simultaneously reduced its allocations to other asset classes, decreasing its real estate bucket to 11 percent from 12 percent and its private markets allocation to 15 percent from 16 percent. PSERS private markets portfolio, which includes private equity investments, totaled $7.67 billion or 14.9 percent of the pension plan’s total portfolio as of 31 March. Real estate totalled $5.91 billion or 11.5 percent of the PSERS total portfolio as of the end of first quarter.

The pension plan’s total portfolio earned returns, net of fees, of 12.74 percent for the one-year period ending 31 March; 5.65 percent for the three-year period ending that date; 7.06 percent over five years; and 4.22 percent for the 10 years.

PSERS did not respond to request for comment.