Pennsylvania Retirement System Approves $250 Million in New Investments

The Pennsylvania State Employees’ Retirement System (SERS) said its board has approved up to $250 million in new investments for the state’s pension system, and that it will be funded with cash.

Of the $250 million, up to $150 million will be allocated within SERS’ multi-strategy asset class to Glendon Opportunities Fund II, which focuses on non-control distressed credit and other special situation investments.

Up to $100 million will be invested within the private equity asset class, $50 million of which will be invested in Asia Alternatives Capital Partners V, LP, while the remaining $50 million will be put in Penn Asia Investors. SERS said the funds focus on primary, secondary, and direct co-investments throughout Asia, mainly in growth and buyout capital, with a minority share in venture capital and special situation investments.

In addition to the $250 million in new investments, the Pennsylvania SERS board also approved reallocating just over $1 billion within the portfolio. The reallocation includes approximately $249 million from fixed income, and $400 million of cash to the MCM Russell 3000 Index. It also includes approximately $358 million within the fixed-income portfolio to the PIMCO Core Bond (ex Treasury) portfolio.

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The board also announced that it hired Invesco Advisors, Inc., to act as the stable value fund program manager for the state’s voluntary $3 billion participant-funded deferred compensation program. A stable value fund is a relatively low-risk asset class that focuses on capital preservation and liquidity, while providing returns to participants.

Additionally, the board agreed to amend the general investment consultant contract with RVK to include its assistance with a search for a third-party administrator for both the deferred compensation program and the defined contribution plan to be operational by the beginning of 2019.

To provide time for the request for proposal process, the board also agreed to extend its contract with Empower for one year for third-party administration of the deferred compensation program.

The SERS board also announced it has received a report from Dilworth Paxson, the outside law firm retained by the system’s audit committee to review SERS-related information that arose in a recent federal court case.

“The firm’s review found no compliance violations with SERS’ existing laws, regulations, and policies,” said SERS, “concluding that SERS Investment Office and an outside consultant acted in full compliance with their statutory and ethical responsibilities.”

Tags: distressed credit, Pennsylvania State Employees Retirement System (SERS), Private Equity, SERS

Commodities saw a drop-off in performance for June, Credit Suisse Asset Management reports, with the Bloomberg Commodity Index turning in a negative total return for the month. Of the 22 index components, 12 reported losses.

Credit Suisse noted the following about the performance of various index groups:

Energy was down 3.74%, with rising production out of Nigeria and Libya hitting crude oil and petroleum products.
Precious metals was off 3.12%, on expectations that the Fed would move more strongly to reduce its balance sheet.
Livestock dipped 1.88%, on the influence of live cattle, as the USDA noted that production of beef was above its five-year average.
Agriculture rose 3.08%, on concerns about the upcoming US spring wheat crop that faces dry and hot weather in the Northern Plains.
Industrial metals gained 3.37%, as markets became hopeful that China’s tightening of credit would not impact economic stability.

Christopher Burton, senior portfolio manager, Credit Suisse total commodity return strategy, noted, “the demand for Precious Metals continues to be influenced by the strength of the US Dollar and safe haven demand. The trend of higher interest rates may hurt precious metals demand, unless offset by greater inflation, while safe haven demand is likely to remain intact.”

Credit Suisse also notes that inflation has been contained as a result of low energy prices. Markets are watching to see if increased production in Nigeria and Libya will be sustainable, and also wonderiif other OPEC members will take action to curtail the impact of the rising supply.

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Industrial metals continue to feel the impact of labor disputes, and restrictions on the production of certain metals on environmental concerns. Also, with the livestock market’s view of the US as a safe supplier, the country could gain a higher share of the beef market, as Brazil faces a meat scandal and inquiry into corruption.

Nelson Louie, global head of commodities, Credit Suisse Asset Management, said, “Recoveries of major economies seem to be moving in the same direction. Reported manufacturing activity in the US and Europe remained in expansion territory, while China returned to a slight expansion in June, which may be supportive of base metals demand.”

He added that consumer confidence levels in the US and parts of the Eurozone have risen, and that central banks continue to be accommodating in the face of these positive economic indicators. Besides, concerns about the pace of Chinese growth have abated following the Chinese central bank’s indication that it would continue to support economic growth, even as it clamps down on credit availability.

Tags: Commodities, Credit Suisse, energy