PA PSERS Board Approves Asset Allocation

The Board's strategic asset allocation approval establishes the guidelines for how PSERS’ investment professionals and external managers invest assets of the $72.5 billion fund to meet its long-term retirement obligations to the System’s active and retired members. The Board’s allocation changes, including an increase in public equities and the elimination of its absolute return holdings, are expected to be implemented prudently over the course of months or years. 

 

“The Board’s decision to change the asset allocation by adding more public equity over time will help increase PSERS net investment income in positive market conditions, “said Board Chair Chris Santa Maria “However, this allocation also increases slightly our risk profile in down market conditions.” 

A summary of the changes between the current and new allocation shows: 

 

Asset Class	Current Target Allocation	New Asset Allocation	Change
U.S. Equity (Public Corporate Stocks)	11.00%	21.00%	10.00%
Non-U.S. Equity (Public Corporate Stocks)	16.00%	15.00%	-1.00%
Private Equity (Non-Public Companies)	12.00%	12.00%	0.00%
Public Fixed Income	27.00%	28.00%	1.00%
Private Fixed Income	8.00%	6.00%	-2.00%
Public Real Assets	17.00%	14.00%	-3.00%
Private Real Assets	11.00%	12.00%	1.00%
Absolute Return	8.00%	0.00%	-8.00%
Cash	3.00%	3.00%	0.00%
Explicit Leverage	-13.00%	-11.00%	2.00%
Total	100.00%	100.00%	​

“I look forward to working with the Board to implement this new asset allocation in the best interest of PSERS members and constituents,” said Acting Chief Investment Officer Bob Devine. 

 

Earlier in the day, the Board’s Investment Committee released the Fund’s preliminary net performance for the quarter ended Sept. 30, 2021. The Fund’s net return was 3.05%, which is higher than its 1.98% benchmark for the quarter. The 1-year return was 23.39%; 3-year, 11.00%; 5year, 9.96%; and 10-year, 8.76%.

 

In other investment matters, the Board announced it had approved two commitments in notational ballots conducted on Nov. 19, 2021: 

• $150 million in Sixth Street Opportunities Partners V 

• $300 million in Brookfield Strategic Real Estate Partners IV L.P.

 

On Friday, the Board also voted to approve three other investments:

• $125 million in Bain Capital Special Situations Asia II, L.P.

• €200 million in ICG Europe Fund VIII SCSp (and/or related investment vehicles)

• $300 million in Brookfield Global Transition Fund, L.P.

 

More information can be found on the “investment program” page on PSERS’ website at www.psers.pa.gov.

 

About the Pennsylvania Public School Employees’ Retirement System

 

PSERS, founded in 1917, began operations in 1919 to oversee a statewide defined benefit pension plan for public school employees. PSERS' role expanded upon the passage of Act 5 of 2017 to include oversight of two new hybrid benefit options consisting of defined benefit and defined contribution (DC) components and a stand-alone DC plan. As of June 30, 2021, PSERS had total net assets of $72.5 billion and a membership of about 248,000 active, 243,000 retired school employees and 27,000 vested inactive members.

 

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