Oregon Investment Council (OIC) Chief Investment Officer John Skjervem defended the fund’s practices of paying millions to private equity fund managers to any potential skeptics who may be inclined to criticize the behavior.
“My snarky remark for someone who comes up here and criticizes us for paying a lot of fees to private equity managers or criticizes us for not indexing—we would be billions of dollars worse off as a state and would be billions of dollars worse off as a fund, were we to follow that type of advice,” Skjervem said in a board meeting.
“That we spend millions of dollars on fees, and we spend millions of dollars in carried interest, and we spend millions of dollars in active management fees in the public part of the portfolio. And in exchange, we’ve gotten billions—so that’s a pretty good trade-off. And I can’t emphasize enough the magnitude of that trade-off. Spending millions to get billions seems like a pretty good deal.”
Skjervem was reviewing recent performance figures generated by the OIC’s fund managers, where private equity was the highest by a considerable margin.
The $72.5 billion OIC remains active in the private equity space, and just recently approved a $500 million commitment to Blackstone Capital Partners VIII, which was on top of $850 million in existing commitments across Blackstone funds to date, with the partnership dating back to 2011.
The council is overweight to private equity, having a 17.5% target to the class but an actual allocation measured at 22.1%. The portfolio is valuated at $16.04 billion as of the end of last year.
Skjervem joined the OIC in November 2012, after serving over 21 years at Northern Trust as its senior chief investment officer.
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