This private equity fund was the most popular among pensions last year
With a high-flying 2021 in the private markets rearview mirror, a new study looks back at the most active asset class allocators — and their favorite managers.
California’s public employee retirement system committed the most capital to private markets among pension funds in 2021, according to the study, which was conducted by Alternatives Watch Research and commissioned by the investment technology provider Vidrio Financial alternatives.
The report also identified the most popular private equity manager among pension funds: Hellman & Friedman, which garnered commitments from ten public funds.
In total, the amount of new capital commitments to alternatives in 2021 exceeded that of 2020 by $30 billion, according to the report. Scheduled to be released on Tuesday, the report tracked $130 billion in new capital commitments across more than 900 institutional investor mandates from 50 of the top alternative allocators.
As a premier private equity firm, Hellman & Friedman has raised $24 billion and self-committed $1.8 billion through a general partner commitment. Pensions, including CalPERS and the Massachusetts Pension Reserves Investment Management Board, have invested in the fund.
Ares Management reigned supreme among credit managers, closing $9 billion of direct loan commitments in the United States, a $2 billion secured loan fund in Asia and a $5 billion close of its second private credit solutions fund. South Carolina Retirement System, Virginia Retirement System and CalPERS were among the investors.
Brookfield Asset Management topped the real estate and infrastructure rankings after raising its fourth flagship real estate fund and first global transition fund, totaling $12 billion. The Maryland State Retirement and Pension System, Texas TRS, and New York State Common Retirement Fund ranked among the dispatchers.
Meanwhile, CalPERS won the title of largest grantee after committing a total of $17.3 billion to private markets. Adding capital to private markets has been a top priority for the $469.23 billion pension in recent years.
In November, as part of a broader strategic asset allocation plan, CalPERS announced that it would increase its private equity portfolio from 8% to 13% of total assets, an increase of around $25 billion. The fund began selling stocks and Treasuries to finance the surge in private markets, Institutional investor Previously reported.
The Canada Pension Plan Investment Board ranked second in total allocations to private markets, having put $14 billion to work in 2021, according to the report. The fund ranked fourth in private equity commitments, with $3.8 billion; second for credit mandates, with $2.7 billion; and first investment in real estate and infrastructure, with $6.1 billion.
The New York State Common Retirement Fund ranked third overall, with $8.1 billion allocated to private markets in 2021. Connecticut Retirement and Pension Trust Funds ranked fourth with $7.2 billion, and the Florida State Board of Administration ranked fifth with $6.3 billion. They were followed by the Illinois Teachers’ Retirement System ($6.2 billion), the Texas Teachers’ Retirement System ($6.2 billion as of August 31, 2021), the Washington State Investment Board ($5.7 billion billion), the New Jersey Division of Investment ($5.1 billion), and the Oregon Investment Council ($4.8 billion).
Although these dispatchers deployed record capital to managers in 2021, the breakneck pace is unlikely to continue.
“Investors do not expect 2022 to produce the same returns as 2021 as investment teams warned administrators in year-end reports that double-digit numbers that easily topped benchmarks were not sustainable,” said Mazen Jabban, president and CEO of Vidrio Financial. in a report.
Not only will dispatchers continue to move away from the traditional 60-40 model, he says, but they will also focus on a more equal mix of public and private investment.
“Now that inflation is unlikely to be transitory, with macroeconomic uncertainty and the specter of further interest rate hikes on the horizon, benefit recipients are making key shifts in their portfolios,” Jabban said.