OT: PERS Asset Allocation

[horshack.sixpack]

Since we have a number of investment minded folks on here, provide your thoughts on this allocation/goal.

 

[horshack.sixpack]

I'll start. Surprised by Real Estate, Global and International Equity exposure. Private Equity just makes me suspicious of the underlying investment/motivation.

 

[Preacher Franklin]

The economy is very shaky but some great buys for the long haul.

 

[grimedawg1]

I'll start. Surprised by Real Estate, Global and International Equity exposure. Private Equity just makes me suspicious of the underlying investment/motivation.

I imagine the issue with these being above target is the recent drop in equity markets and managers not moving money from one category to another and taking a realized (as opposed to unrealized) loss. I wonder how those private equity and real estate investments are valued and how often fair value is determined. And, it would be nice to know what those consist of. Maybe there is more info on that at the source of this or in the audited financials. If they are good investments, they are serving their purpose of maintaining their value while equity valuations have dropped.

 

[grimedawg1]

I imagine the issue with these being above target is the recent drop in equity markets and managers not moving money from one category to another and taking a realized (as opposed to unrealized) loss. I wonder how those private equity and real estate investments are valued and how often fair value is determined. And, it would be nice to know what those consist of. Maybe there is more info on that at the source of this or in the audited financials. If they are good investments, they are serving their purpose of maintaining their value while equity valuations have dropped.

Targets are pretty much a 60% equity, 20% fixed income and 20% other investments. I wonder what targets for other state pensions across the nation are. 20% for other investments seems a little high to me.

 

[lazydrake]

I am always amused at the private equity allocation. Typically you over pay for under performance. Most PE groups underperform SPY and charge for it. Curious how much of the equity piece is allocated to energy. This has been the top performing sector this year and will probably outperform next year as well.

 

[horshack.sixpack]

I am always amused at the private equity allocation. Typically you over pay for under performance. Most PE groups underperform SPY and charge for it. Curious how much of the equity piece is allocated to energy. This has been the top performing sector this year and will probably outperform next year as well.

I'm more wondering who the private equity is and how they got a piece of the pie. As big as PERS portfolio is, they are bombarded by money managers hoping to get a portion of money to manage and there is little doubt that having ties to PERS investment committee members helps. Of course I'm old and cynical so there's probably nothing to it.

 

[johnson86-1]

I'll start. Surprised by Real Estate, Global and International Equity exposure. Private Equity just makes me suspicious of the underlying investment/motivation.

Traditionally, when pension plans are underfunded, they go to private equity to try to juice returns. But there can also just be investments that PE offers that you can't get elsewhere. And the lack of liquidity means that the asset values don't swing as much on your books, although I'm not sure how important that is to PERS. They already gaslight people asking about the fact that PERS is underfunded and unsustainable. Not sure their assets being more volatile on their books would really impact how big the lies need to be.