By Muskan Arora
The $67 billion State of Maryland Retirement Pension System
has shifted the asset allocations within the portfolio in response to the
current economic environment.
With $1.5 billion to allocate to its private equity sleeve,
after reducing the pacing by $500 million.
The intentional reduction, from $2 billion, is to bring the
AuM back to target over the intermediate period, told Andrew Palmer, the CIO of the
pension fund to Markets Group
Talking about the next two years, in an exclusive
interview, CIO Andrew Palmer highlights each investment is about $100
million but the number of managers is yet to be determined.
As part of the $1.5 billion, the system plans to deploy $250
million each year to co-investments, confirmed Palmer.
In the system’s recent board meeting, the CIO highlighted
that public equity was one of the best performing asset classes for the quarter,
alongside bonds.
State of Maryland allocates 28.9% or $18 billion to its
public equity sleeve, as of September 2023.
Through their public equity sleeve, within the growth equity bucket, the system allocates to both long only and long short strategies in all geographies.
In the emerging
market space, the CIO is pulling back from China, but is still focused on
investments in Asia, including India, and less on Latin America and Africa.
“We
found better, less risky investment opportunities there, we've been pulling
back from Asia on the private side because of this China effect,” he added.
The system used to have high allocation to emerging markets
stock but changes in China has “made the returns lower and risk higher” and
they play a huge part in the EM index.
“We couldn't figure out how to take China out without still
having the economic risk, so we decided to reduce the allocation,” the CIO
said.
Maryland is also set to launch a
consultant search to evaluate whether it is possible and profitable for the
system to target dollars to in-state investments by examining the size of the
private markets in Maryland and the risk and return experience of those
investments.
