San Antonio Fire and Police Wants More Private Investments

The $2.8 billion San Antonio Fire and Police Fund’s board aims to beef up its investments in private markets.

At a recent meeting, consulting firm NEPC presented the board a scenario for upping its presence in this arena, according to its minutes. The board unanimously accepted the proposal to invest $60 million this year for private equity, $45 million for private debt, and $25 million for real assets. Also, it will seek to enlist a private equity co-investment fund.

Rather than hire specialists in each of these areas, the pension fund went with the more generalist NEPC. “I think it just comes down to each client’s governance and internal structure [and] what they have for investment staff as to what’s the right fit for them,” Tim McCusker, NEPC’s chief investment officer, told CIO, adding that the size of the fund is key. “The larger the staff of a public fund, the more likely they might be to have multiple consultants.”

A smaller fund might require “a single touchpoint and want the efficiency of one group that can work across the entire landscape,” according to McCusker. He said an advantage of a lone generalist consultant, other than keeping down costs, is that it can focus on what works for the overall portfolio.

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The fund now allocates 57.7% to equities and 42.3% to fixed income, according to its most recent annual report. Private equity, private debt, and real assets consisted of 4.6%, 5%, and 7.5% of their respective portfolios, which falls short of its targets of 7%, 7%, and 9%, respectively.

The San Antonio Fire and Police Pension Fund was 90.3% funded as of October 4, 2018.

Cary Hally, the fund’s CIO, could not be reached for comment.

Tags: NEPC, Pension, Private Markets, San Antonio Fire & Police Pension, Texas

Thanks to declining interest rates and a boost in global equities, Danish pension fund ATP experienced a mighty surge in the first quarter.

The fund returned 21.7% in the first three months of 2019, a DKK20 billion ($3 billion) harvest thanks to state and mortgage bonds as well as global and domestic stocks, erasing 2018’s 3.2% loss.

Even Bo Foged, the pension plan’s acting chief executive officer, was surprised.

“We have realized an unusually good result for the first quarter of 2019 and delivered a very high return, which is highly satisfactory,” he said. “With this having been said, we can also look forward to generally lower investment returns in the years to come and at the same time we are seeing greater fluctuations between quarters.”

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Foged said ATP will continue its “disciplined approach” to its portfolio construction and risk management as the focus is long-term.

Given the good news, the fund has now returned an aggregate 17%, 20.3%, and 15.8% over the past one, three, and five years, with only three of the past 20 quarters yielding negative results.

ATP shifted its asset mix a bit since 2018’s downdraft. It rebalanced its factor-based risk allocation by moving 2% and 1% from its inflation and interest rate sectors to equities and other areas. The fund was 42% equities, 33% interest rate-coordinated, 17% inflation-linked, and 8% in other factors on March 31.

In its most recent annual report, the fund said its factor framework “enables comparison of all investment activities on the same basis, which is particularly important when it comes to alternative illiquid investments.” A portfolio revamp occurred in 2015.

As for the classes themselves, ATP invests in government and mortgage bonds, foreign and global equities, credit, private equity, real estate, infrastructure, inflation-related instruments, and other assets.

Tags: ATP, Bo Foged, Denmark, Pension