Vermont State doubles private debt target

The US public pension has boosted its policy allocation to the asset class.

Institution: Vermont State Retirement Systems
Headquarters: Montpelier, United States
AUM: $4.58bn
Allocation to alternatives: 12.20%

Vermont State Retirement Systems has moved to double its target allocation to private debt from 5.0 to 10.0 percent, according to materials from the pension’s March 2020 investment committee meeting.

Vermont State is intending to ramp up its private debt exposure at the expense of its core-plus fixed income portfolio. The pension anticipates seeing more robust returns from its movement towards an increased private debt allocation, with evergreen vehicles seen as particularly desirable investments. Vermont State also foresees complimentary synergies between its boosted private debt and private equity asset classes.

The $4.58 billion US public pension has a 2.10 percent current allocation to private debt.

As illustrated below, Vermont State has made five known commitments to private debt funds, with the majority of these being to funds with a focus on subordinated / mezzanine debt.

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