Illinois Teachers Pension Invests Nearly $1.5 Billion in Alts

The Teachers’ Retirement System of the State of Illinois reported investment commitments of more than $2.6 billion since August, nearly $1.5 billion of which has been earmarked for alternative investments.

The pension fund allocated $800 million to new investments within its $12.4 billion real assets portfolio, including up to $300 million to Starwood Capital Group, up to $200 million to Kohlberg Kravis and Roberts, and $300 million to Brookfield Asset Management.

Illinois TRS allocated a total of $680 million within its $10.2 billion private equity portfolio. This includes $200 million to Apollo Global Management; $150 million to Vista Equity Partners; $75 million to SK Capital Partners, and $65 million to Bessemer Venture Partners for two funds. It also set aside $50 million each to Insight Partners, True Ventures, Scale Venture Partners, and $40 million to Longitude Capital Management.

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The pension fund also earmarked $675 million in investments within its $15.4 billion income portfolio, including $400 million to Finisterre Capital, $150 million to PGIM, Inc., and $125 million to Brookfield Asset Management.

And under its $21 billion public equity portfolio, Illinois TRS committed $475 million to Schroders, and terminated a $162 million international equity small capitalization strategy of Strategic Global Advisors. Within it its $4.3 billion diversifying strategies portfolio, the pension fund reported the full redemption of $264 million from PDT Partners.

TRS also said that its long-term funded ratio rose 1.3% during fiscal year 2022 to 43.8%, despite reporting an annual investment loss of 1.17%. That is also above TRS’ average funded ratio of 40.7% over the past decade. The pension fund said that projections by consulting firm Segal show “slow but steady improvements” in the funded ratio between fiscal year 2022 and fiscal year 2045, when TRS is required by state law to have a funded ratio of at least 90%. Over the last two years, TRS funded ratio has improved by 3.3%.

“The system’s improved funded ratio is a bright spot in a challenging investment year,” Illinois TRS Chief Investment Officer Stan Rupnik said in a statement. “The TRS funded ratio improved this year primarily because of consistently positive investment returns over the last five years combined with steady state funding that for two years exceeded the statutory minimum.”