By David G. Barry
Teachers’ Retirement System of Louisiana (TRSL) is poised to launch a new asset allocation strategy—one that will result in increased targets for real estate and venture capital and a pullback on stocks.
AON recently presented a report to TRSL’s board, outlining 10 possible asset allocation strategies, two of which the board will consider on May 5, said Michelle Millhollon, TRSL’s public communications director.
Both strategies have the $26 billion fund increasing real estate’s allocation to 15% from 10%. Private equity, meanwhile, would go from 14%—3% of which is in venture capital—to either 18% or 19% with venture capital increasing in both scenarios to 7%. As of January 31, TRSL had 22.6% in private equity—7.6% of which was in venture capital.
The plans to be considered by the board also would double infrastructure to 3%
and farmland to 1%.
To make up for these increases, TRSL would drop its target for equities and public REITs, which are currently at 46%. Under the two scenarios, TRSL would target 33% or 34.6%.
In addition to the new asset allocation strategy, TRSL is for the first time seeking a manager to locate, evaluate and commit to co-investment opportunities offered by private market investment funds. TRSL earlier this month received proposals for the mandate, which will be approximately $300 million over a three-year period, Millhollon said. The pension fund is seeking to select a firm by early June.
According to the solicitation for proposals, the winning firm will have discretionary investment authority to direct, suggest, manage, monitor or acquire any private equity and real asset co-investments subject to the pension fund’s investment policy statement.
Millhollon also said that TRSL’s investment committee recommended up to $50 million in EQT X, SCSp, a private equity fund, and up to $75 million in Cabot Industrial Value Fund, a real estate-focused vehicle. These investments will be handled by TRSL’s private markets manager, Hamilton Lane. At the same meeting, TRSL’s investment committee was scheduled to consider investing in Advent International GPE X, L.P., but Millhollon said TRSL did not commit to the fund at the meeting.