March 28, 2022 (Des Moines, IA) – At its quarterly meeting held last Friday in Des Moines, the Investment Board of the Iowa Public Employees’ Retirement System (IPERS) approved hiring firms to manage various strategies within IPERS’ $45.2 billion portfolio. All hirings are subject to final due diligence and successful contract negotiations.
“In late 2020, the Investment Board directed IPERS staff to implement an ambitious allocation plan,” said IPERS CEO Greg Samorajski. “Since then, we’ve worked diligently to strategically acquire the resources necessary to implement this plan and ensure its success. This marks another milestone in that process as the Board approves hiring several new external managers. IPERS will work in close partnership with these firms to execute the Board’s plan.”
Real asset credit
The Board approved hiring 11 firms to manage the substrategies of the real assets portion of IPERS’ private credit portfolio. The hirings are in response to the Board’s September 2020 decision to increase the private credit target allocation from 3% to 8%. Over the last two years IPERS issued two RFPs to select asset managers for the private credit portfolio. These hirings are in response to the second RFP that was issued in July 2021.
| Firms/Subcategory | Allocation Range (in millions) | |
|---|---|---|
| Core Real Estate Debt | ||
| Heitman CREDIT | ||
| Principal | ||
| Subtotal | $150 | $350 |
| Opportunistic Real Estate Debt | ||
| Kayne Anderson KARED IV | ||
| Oaktree, RE Debt Fund II | ||
| Sound Mark (Bench Manager) | ||
| Calmwater (Bench Manager) | ||
| Subtotal | $200 | $400 |
| Infrastructure Debt | ||
| IFM Investors | ||
| Subtotal | $50 | $150 |
| Leasing Strategies | ||
| Oak Street | ||
| JP Morgan, GTIF | ||
| Subtotal | $100 | $300 |
| Other Real Assets Credit | ||
| Raven Capitol Management | ||
| AgAmerica Lending (Bench Manager) | ||
| Subtotal | $50 | $150 |
| TOTAL REAL ASSETS CREDIT PORTFOLIO | $550 | $1,350 |
Absolute return strategies
The Board approved hiring nine firms to support IPERS’ absolute return allocation. The new hires supplement the current firms that manage approximately $917 million. IPERS intends to identify four to five products that best match its requirements. The remaining firms will be bench managers.
| Firm | Product Class |
|---|---|
| Arrowstreet Capital | Global Equity Long/Short |
| Camden | Camden Bond Strategy |
| Verition | Multi-Strategy Fund |
| Brevan Howard | AS Macro |
| Man Group | Man GLG Emerging Market Debt |
| Millennium Global | Millennium Active Currency Alpha |
| Capula | Global Relative Value |
| ROW | CTA Diversified Program |
| Mesirow | Mesirow Emerging Markets Currency Alpha |
At Friday’s meeting, Wilshire, IPERS’ investment consultant, shared a summary of the plan’s CY2021 performance. Highlights from their report include the following:
- IPERS returned 19.0% in CY2021, outperforming its benchmark of 18.4%.
- Three- and five-year returns beat the policy benchmark and outperformed the Public Markets Reference Index by 2.4% and 2.3%, respectively.
- IPERS ranks very favorably versus peers across all time horizons. IPERS’ returns have ranked in the top quartile against all public plans with more than $1 billion in assets over three, five and 10 years.
- IPERS 10-year risk-adjusted returns remain in the top-quartile, relative to all public plans with more than $1 billion in assets.
Complete materials from the meeting are available. The Board’s next meeting is scheduled for June 16, 2022.