NY Pension Shifts Global Equity Assets to Alts

The New York State Common Retirement Fund has cashed out of more than $600 million in global equity investments, while making over $700 million in new commitments to alternative investments. The fund also agreed to invest $2 billion in FTSE Russell’s Russell 1000 TPI Climate Transition Index, which is focused on reducing the risks of climate change.

According to its most recent monthly transaction report, which covers October, the $267.8 billion fund terminated its $606 million global equity account with Iridian Asset Management and allocated that amount to cash. The fund then used its cash allocations to make $310 million in private equity investments, including a $300 million commitment to Insight Partners’ Insight Partners XII fund, which will pursue growth stage investments in primarily North American software, software-enabled services, and internet companies.

The remaining $10 million was added to its JVP Growth Opportunity X fund, doubling its holding to $20 million. The fund targets investments in growth stage Israeli and Israel-related tech companies.

Under its credit portfolio, the pension fund invested $250 million in Owl Rock Diversified Advisors’ Owl Rock Diversified Lending Fund, which provides non-bank financing services to sponsored upper middle-market companies. And within its opportunistic absolute return strategies investments, the fund committed $170 million to Frazier Life Sciences’ Frazier Life Sciences Public Fund, a closed-end fund that invests in public and crossover/mezzanine securities of biotech and life sciences companies.

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The pension fund also committed up to $15 million to the Hillcrest Enhanced Yield and Income Fund I, which is a real estate asset class investment within its Emerging Manager Program. The fund is a real estate joint venture with Hillcrest Finance that focuses on originating stretch senior and mezzanine debt, as well as preferred equity backed by commercial real estate. The Emerging Manager Program was created by the pension fund to provide opportunities to newer, smaller, and diverse investment management firms.

New York State Comptroller Thomas DiNapoli, who is the pension fund’s trustee, also announced that the fund will invest $2 billion within its public equity portfolio to FTSE Russell’s Russell 1000 TPI Climate Transition Index, which is focused on mitigating climate change risks. The investment is part of the pension fund’s pledge to produce net-zero greenhouse gas emissions by 2040.

The index uses five criteria to evaluate a company’s efforts to transition to a net-zero economy. It examines a company’s fossil fuel reserves, carbon emissions, green revenues, management quality, and carbon performance, which will be used to overweight, underweight or exclude the firms based on their preparedness for a transition to a low-carbon economy.

“By using the Climate Transition Index, the fund will have an investment tool that incorporates a robust data-driven approach to invest in corporations that are ensuring their businesses are ready for the low-carbon transition and stand to perform well in the years ahead,” DiNapoli said in a statement.