IPERS Plans Private Asset Reallocation

The Illinois Public Employees’ Retirement System plans to shrink its private equity allocation, according to its most recent board meeting. Private equity comprised 19% of the private market portfolio as of November 24, but the fund wants to shrink its long-term target to 17% and increase its allocation to private credit to 8% from the current level of 5.6%, as of November 24. Fund leadership also wants to increase the allocation to private real assets to 9.5% in the long term from 8%. 

IPERS plans to keep commitments to private equity for 2024 at $700 million, the same amount as in 2023, a move the fund calls “tapping the brakes.” IPERS had committed $632 million as of November 24.  

The fund plans to make a push into private credit. As part of the shift, IPERS intends to allocate $700 million to private credit in 2024, as well as $500 million to private real assets. The fund is also planning to commit $200 million to internal co-investments across private credit and private real assets, with a co-investment holding entity to be created by the first quarter of 2024. While the fund planned to allocate $850 million to private credit in CY 2023, only $200 million had been committed through the third quarter of CY 2023, because “onboarding credit requires layers of due diligence” and an “18- to 24-month underwriting process,” according to the report.  

IPERS manages $41 billion in assets and has 67.29% of its assets in public assets and 32.71% in private assets, as of November 24. In fiscal 2023, which ended September 30, the fund returned an annualized 5.41%. 

The fund’s allocation to public markets is as follows: 

• 22.5% allocation to core fixed income; 
• 20.% to domestic equities; 
• 13.7% to international equities; 
• 4.9% to global smart beta; 
• 2.9% in public credit; and 
• 2.2% in cash.  

The fund also announced an increase in its funded status, reporting a funded ratio of 89.7%, a slight increase from 89.5% in fiscal 2022.  

“IPERS members should feel confident in the financial strength of the trust fund that pays benefits,” IPERS CEO Greg Samorajski said in a statement. “Investment earnings over the last few years have been sufficient to increase IPERS’ funded ratio and hold contribution rates steady. IPERS is on track to completely eliminate the unfunded liability within approximately 21 years.” 

The IPERS fund benefits 392,725 current and former public employees of Iowa. 

Related Articles: 

IPERS Reallocates Portfolio and Portfolio Agenda 

No Plans to Cut IPERS Benefits, Iowa Gov. Says 

Iowa PERS Announces 5.41% Return for Fiscal 2023, Exceeding Benchmark