The $2.8 billion San Antonio Fire and Police Fund’s board aims to beef up its investments in private markets.
At a recent meeting, consulting firm NEPC presented the board a scenario for upping its presence in this arena, according to its minutes. The board unanimously accepted the proposal to invest $60 million this year for private equity, $45 million for private debt, and $25 million for real assets. Also, it will seek to enlist a private equity co-investment fund.
Rather than hire specialists in each of these areas, the pension fund went with the more generalist NEPC. “I think it just comes down to each client’s governance and internal structure [and] what they have for investment staff as to what’s the right fit for them,” Tim McCusker, NEPC’s chief investment officer, told CIO, adding that the size of the fund is key. “The larger the staff of a public fund, the more likely they might be to have multiple consultants.”
A smaller fund might require “a single touchpoint and want the efficiency of one group that can work across the entire landscape,” according to McCusker. He said an advantage of a lone generalist consultant, other than keeping down costs, is that it can focus on what works for the overall portfolio.
The fund now allocates 57.7% to equities and 42.3% to fixed income, according to its most recent annual report. Private equity, private debt, and real assets consisted of 4.6%, 5%, and 7.5% of their respective portfolios, which falls short of its targets of 7%, 7%, and 9%, respectively.
The San Antonio Fire and Police Pension Fund was 90.3% funded as of October 4, 2018.
Cary Hally, the fund’s CIO, could not be reached for comment.
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