Private Equity Steers Iowa PERS to 8.35% Return

Fund beats 2018 performance and assumed rate, but just misses benchmark.

The Iowa Public Employees’ Retirement System (IPERS) returned 8.35% in the fiscal year ended June 30, beating its 2018 performance and 7% assumed rate but slightly missing its 8.64% benchmark.

“Despite some challenging market conditions this year, our investment team continued to outperform our investment assumptions,” said Chief Executive Officer Donna Mueller.

The fund’s assets grew to $33.96 billion over the year. It returned 7.97% the year prior.

The plan’s showing brings its three-, five-, and 10-year returns to 9.33%, 6.77%, and 9.63%, respectively.

Private equity was the top performer by a landslide, earning 19.18%, according to an email from the fund’s media contact, Shawna Lode. Public credit, core plus fixed income, and domestic equity investments all gained more than 8%, at 8.66%, 8.60%, and 8.31%, respectively. Private real assets and private credit returned more than 7%, at 7.04% and 7.09%, respectively. Cash earned 6.51%, while public real assets gained 6.07%. Global smart beta equity and international equity rounded out the pack, returning 4.73% and 0.33%.

Iowa PERS’s asset mix targets are 40% equities (22% domestic, 15% international, and 3% global smart beta equity), 27% core-plus fixed income, 11% private equity, 7.5% private real assets, 7% public real assets, 3.5% public credit, 3% private credit, and 1% cash.

Although mostly minor, the allocations rebalances from last year happened across all categories. Domestic and smart beta equities were decreased from fiscal 2018’s 22.93% and 3.03%, and international equities were slightly increased from 14.68%.

The biggest tweaks are planned for the private markets, as the private equity and private real asset investments are scheduled to drop nearly two and one percentage points, respectively. Private credit allocations, however, are set to increase by more than two percentage points.

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