By Muskan Arora
The $45.27bn Iowa Public Employees Retirement System has
selected five investment firms/strategies for its absolute return portfolio,
amid disclosing allocation of $2.3bn for 2025.
The RFP was issued with the intention of “identifying
absolute return investment products that could potentially be used in a
portable alpha strategy.”
The five chosen strategies include AQR Helix Strategy, Brevan
Howard Alpha Strategies Master Fund Limited, Bracebridge Absolute Return
Composite, Blackstone Strategic Opportunity Fund and Navigator Fund.
The portfolio returned 9.1% (net of fees) in FY2024,
outperforming its benchmark return of 8.8% over the same period.
2025 plans
Iowa PERS plans to decrease its private equity exposure, while ramping up its private credit and real assets exposure.
For its real assets sleeve, the system has set a
pacing of $1bn for the coming year, with the maximum exposure of up to $500m infrastructure
mandates.
The remaining would be divided between real estate, which totals
to up to $400m focused on value add and core real estate managers. Up to $100m
will be divided among 5 co-investment vehicles, with ticket size of $20m for each
commitment.
In 2024, within private equity, Iowa PERS allocated
65% of pacing to primaries, 20% to co-investments and 15% to secondaries, “in
line with the portfolio’s long-term targeted exposures.” As of Q3, unfunded
commitments in Private Equity were $2.4 bn
This has led to a pacing plan of $700m for the next year,
with a range of $650m to $850m.
Within its private credit portfolio, the system will
increase allocation of opportunistic credit to 37% from 35%, whilst maintaining
real assets credit at 28% and decreasing allocation to direct lending to 34%
from 37%.
The system has set pacing for up to $100m each in
co-investment deals and direct lending, up to $300 to opportunistic credit, up
to $150m to real assets credit.
For the quarter ending September 30, private equity returned
0.53%, private credit returned 1.17% and real assets returned -0.25%.
