New York State Teachers Tweaks Asset Allocation Targets

By David G. Barry

Coming off a difficult quarter, the New York State Teachers’ Retirement System (NYSTRS) tweaked its asset allocation targets.

Following a plan proposed by consultant Callan, NYSTRS’ upped its private equity target to 9% from 8% and lowered its international equity target to 15% from 16%. The move brings NYSTRS closer to its actual private equity allocation figure – which was 9.9% as of Dec. 31.

According to data from another consultant, StepStone Group, NYSTRS’ private equity portfolio produced a total net internal rate of return of 35.9% in 2021. As of June 30, the PE portfolio was valued at $14.6 billion, down slightly from $14.7 billion as of June 30.

The plan was reviewed and voted on by NYSTRS’ Investment Committee on Aug. 3.

Within the private equity portfolio, StepStone also suggested a pacing plan of $2 billion annually to get it closer to its allocation target over the next five years. In 2021, it allocated $2.3 billion. In 2020, it was $2.4 billion and in 2019, it was $2.5 billion. So far in 2022, it has allocated $1.4 billion.

StepStone also suggested another slight tweak, decreasing the target to venture capital/growth equity to 10% from 15% and increasing the target of “other” to 10% from 5%. Other included secondaries and co-investments. In fact, StepStone suggested to NYSTRS that it explore the use of direct co-investments with existing managers to selectively gain additional exposure to underlying investments while helping to reduce overall economics. The suggestion echoes the moves that are being done/contemplated by such other large public pension funds as California State Public Employees’ Retirement System (CalPERS) and California State Teachers’ Retirement System (CalSTRS).


NYSTRS’ asset allocation tweak comes off a quarter in which it saw its asset under management drop from $145.5 billion at the end of March to $130.4 billion at the end of June, a more than 10% decline. Over the past year, it has seen a decline of $15.9 billion.

The plan said it generated $2.4 billion of net income and received contributions from members of $1.7 billion but paid out $8.08 billion in benefits and had investment losses of $12 billion.

As of June 30, 2021, NYSTRS said its estimated funded ratio using the actual value of assets was 99%.