NY State Pension Fund Commits Over $1.3 Billion in Investments in March

The $247.7 billion New York State Common Retirement Fund (NYSCRF) committed more than $1.3 billion in new investments in March, nearly half of which was allocated to real estate funds, with the remainder going toward investments in fixed income, private equity, credit, and its Emerging Manager Program.

The pension fund committed $650 million to real estate funds, including $300 million to the LaSalle Property Fund, an open-ended fund structure that acquires and manages a diversified portfolio of core real estate; and $200 million to Oaktree Real Estate Opportunities Fund VIII, which focuses on opportunistic real estate debt and equity investments. Although the pension fund has an existing relationship with Oaktree Capital Management, it is a new relationship for the fund’s real estate team.

The pension fund also committed $150 million to the Kayne Anderson Real Estate Partners VI fund, a closed-end fund that will invest in alternative real estate sectors with “favorable demographic patterns,” such as health care-related real estate and student housing. As with Oaktree, Kayne Anderson Capital Advisors already has a relationship with the pension fund, but this is the first time it has worked with the real estate unit.

Another $260 million was committed as part of the pension fund’s Emerging Manager Program, which was established to invest in newer, smaller, and more diverse investment management firms. The lion’s share, or $250 million of that amount, was committed to an Avance Investment Management fund that will pursue buyout transactions in the US lower middle market targeting the consumer and services industries. The remaining $10 million is earmarked for the Roxborough Fund III, a closed-end, commingled investment vehicle sponsored by The Roxborough Group that will focus on value-add multifamily, office, industrial, and distressed hospitality investments.

For more stories like this, sign up for the CIO Alert newsletter. 

Both Avance Investment Management and the Roxborough Group represent new relationships for the pension fund.

An additional $250 million was committed to New Century Advisors under the pension fund’s fixed-income portfolio. The investment was revised from a 100% Treasury inflation-protected securities (TIPS) portfolio to 50% Treasurys and 50% TIPS.

As part of the pension fund’s credit portfolio, €100 million ($121.4 million) was committed to Blantyre Capital Ltd – Madison Square Fund II, LP which will invest in stressed and distressed corporate financing opportunities, non-distressed companies requiring complex capital structure solutions, and other credit-oriented special-situations investments in the European lower middle market.

And the fund committed a total of $48 million of investments within its private equity portfolio, $38 million of which will target China-related investments. The fund set aside $25 million for the Boyu Capital Fund V, which will pursue minority growth and growth buyout investments primarily in China, and $5 million in the Boyu Capital Growth Fund I, which will seek out minority growth and growth buyout investments mainly in China.

The pension also committed nearly $4.9 million to the 5Y Capital Growth Fund I, which will make investments in mid- to late-stage venture opportunities in China. Close to $3.3 million has been earmarked for the 5Y Capital Evolution Fund II, which will make early stage venture investments in China.

The remaining $10 million in credit investments went to the Viola Ventures VI, through the Hamilton Lane/NYSCRF Israel Fund, which will make early stage venture investments in the technology industry.

New York State Pension Fund Aims to Be Carbon Net Zero by 2040

NY State Pension Restricts Oil Sands Investments

Tags: 5Y Capital, Boyu Capital, Credit, Fixed-Income, New York State Common Retirement Fund (NYCRF), Oaktree Capital Management, Private Equity, Real Estate

University of Chicago CIO Mark Schmid

University of Chicago CIO Mark Schmid will retire Sept. 1., after more than 12 years managing the university endowment’s investments. The school said it will launch a national search to find his successor.

During Schmid’s tenure, he has overseen the endowment’s growth from $4.9 billion in 2009 to $8.6 billion as of the end of fiscal year 2020, and an estimated $10 billion today, according to the university, which said the investment performance under his watch “has markedly improved” compared to peers on a risk-adjusted basis.

“I am grateful for all of Mark’s contributions to the university, and for his service as an insightful and trusted colleague,” University of Chicago President Robert Zimmer said in a statement.

Instead of jumping on the “Yale Model” bandwagon, Schmid and his team developed an investment strategy that focused mainly on risk, while taking into account factors such as liquidity, convexity, and leverage, as well as the university’s total leverage, charitable gifts, and capital plans.

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

Through the end of fiscal 2020, the portfolio’s investment returns added more than $6 billion to the endowment’s market value since the financial crisis in 2008 and 2009, spurred by an 8.9% average annual return. The endowment’s average annual investment returns over the past 10, 15, and 20 years were 7.7%, 7.4%, and 6.6%, respectively, for the year ended June 30.

The university said Schmid also helped significantly increase the diversity of the endowment’s external investment managers, with $1.8 billion of investment assets currently managed by minority- and women-owned firms. Schmid was awarded the University’s inaugural John Rogers Jr. Business Diversity Impact Award in 2018, and received a Lifetime Achievement Award from CIO Magazine in 2016.

Before joining the University of Chicago, Schmid was CIO at Boeing, where he was responsible for managing the airplane manufacturer’s $70 billion in retirement assets and helped lower risk through liability-driven investing (LDI). Prior to Boeing, Schmid spent 17 years at DaimlerChrysler in various accounting, finance, and treasury roles, including as treasurer of Chrysler Canada, and served as CIO for six years managing the automaker’s $30 billion pension and 401(k) plans.

Although the university said it would conduct a nationwide search for a successor, Schmid indicated in a 2016 interview with CIO that there are members of his 29-person team who are ready to assume the helm when he leaves.

“Part of my job here is that the management doesn’t have to go outside when I move on,” Schmid said. “I’ve already accomplished that. There are definitely people here who can do this job.”