New York State Pension Boosts Private Equity Investments

More than half of the $1.3 billion in June commitments were made within the NYSCRF’s PE portfolio.



The New York State Common Retirement Fund committed nearly $1.3 billion in investments in June, more than half of which were made within its private equity portfolio, according to the fund’s monthly transaction report.

Among the approximately $1.28 billion worth of investments committed during the month, $670 million was earmarked for private equity. According to a study released last month by the American Investment Council, private equity has generated the most growth for allocators, with annual returns of 15.2% over a 10-year period ending in 2023.

The biggest PE investment the $268 billion pension fund made was a $200 million commitment to the JFL Equity Investors V fund managed by J.F. Lehman & Co., which marks a new relationship for the NYSCRF. The fund will seek investments in the aerospace, maritime, environmental and infrastructure services, and government and defense sectors, with a focus on the North American and Western European markets.

The pension fund also committed $125 million to the One Rock Capital Partners IV fund managed by One Rock Capital Partners. The fund will seek investments in middle-market companies in several sectors, including the chemicals and process industries; specialty manufacturing and health care products sectors; food and beverage manufacturing and distribution; and environmental services.

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Another $75 million was set aside for One Rock Capital Partners’ ORCP IV Delaware Co-Investor 2 fund, which aims to invest additional capital alongside One Rock IV Investments, mainly in the U.S. It also invested $50 million in One Rock Emerald Fund, which will target investments in lower middle-market companies within multiple sectors, primarily in the U.S.

The pension fund also committed $120 million to the Altaris VI-5084 Co-Invest fund in two tranches of $60 million each. The fund will invest additional capital in co-investment opportunities alongside Altaris Health Partners, primarily in North America. Meanwhile, the NYSCRF also allotted $100 million to the JFL VI NYSCRF Co-Invest Partners, which will invest additional capital in co-investment opportunities with JFL Equity Investors, mainly in North America and Western Europe. It is the first time the pension fund has worked with JFL.

Within its real estate portfolio, the pension fund set aside $300 million for the Star Lake Opportunity Fund V, which will focus on residential and industrial assets investing in property sectors in primary and secondary markets. It also paid more than $1.9 million for a project site in Albany, New York, that will include a newly constructed five-story building containing 51 residential units, as well as a renovated two-story building intended to provide community space.

After several months during which the pension fund cut back on its public equity investments, the NYSCRF earmarked $300 million within its public equity portfolio to the DRZ SMID Cap Value fund managed by DRZ Investment Advisors, which also marks a new relationship for the pension fund.

Within its Emerging Manager Program, which invests in newer, small and diverse-owned investment management firms, the pension fund committed $10.4 million to the OPC Fund I, which will invest in residential and industrial equity investments, as well as distressed investments among all property and security types. The fund is managed by OlivePoint Capital and is a new relationship for the NYSCRF.

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CFA Institute Develops Framework to Clear Up Passive/Active Confusion

According to the association, the ‘bifurcation between active and passive investment products is outdated.’



The CFA Institute Research and Policy Center, an association of investment professionals, has issued a new investment classification framework aimed at clearing up confusion about passive index-based strategies that often include active involvement.

The framework is intended to provide policy recommendations for regulators and firms concerning transparency, communication and investor comprehension of smart beta, direct indexing and index-based investment products. In a report detailing the framework, the CFA classifies the self-described passive investment strategies into four levels that indicate how much they use active decisions. The levels range from Level 1, which denotes minimally active investments, to Level 4’s “maximally active” strategies.

For example, it classifies smart beta exchange-traded funds as Level 2, because CFA’s research found that they incorporate “many active decisions,” such as identifying factors and defining weighting methods.

According to the CFA, direct investing can be classified within a range of Levels 1 through 3 due to “high levels of personalization according to the preferences and circumstances of the investor.” Direct investing involves directly holding the underlying securities of an index, with the ability to underweight or overweight specific securities and asset classes according to investor preferences.

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“Although such products as smart beta ETFs and direct indexing are rules based, their construction involves active decision making that goes beyond cap-weighted index funds,” the CFA stated in its report. “Investors should be aware of the active decisions involved in the creation and maintenance of index-based products, including security selection, weighting methodologies, and rebalancing strategies.”

According to the CFA’s report, while index investing is considered passive, with no difference in portfolio weightings from the benchmark allocations, strategies such as smart beta and direct indexing leave “ambiguities” as to how they should be classified and understood.

“The notion of a simple bifurcation between active and passive investment products is outdated,” said CFA Senior Head of Research Rhodri Preece in a statement. “Index-based strategies are varied in their design features and involve different layers of active decision-making, dispelling the historical distinction between active and passive management.”

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