NEWS

Wisconsin bets on PE over equity for next year

By Muskan Arora

The State of Wisconsin Investment Board plans to hike its private equity/debt target allocation in 2025, as discussed at its October workshop.

The strategy of moving towards private investments is working for the system, as the ten-year geometric return for private equity/debt was 8.1% whereas for public equity it is at 5%.  

Private equity has outperformed the public equity market as for the ten-year return (ending June 30), as the PE portfolio returned 5.7%, net of fee.

The system plans to increase the PE/Debt allocation to 20% from 18%. However, the board will be presented with final recommendations at the December meeting.


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Allocation to real estate at 8% is maintained, as the “exposure can enhance risk-adjusted returns” considering the markets’ shift towards higher interest rates and inflation levels.

To support its long-term plan, the system considers decreasing equity allocation to 38% from 40%, whilst maintaining 27% allocation to fixed income and 19% to TIPS.

Strong equity performance over the past 12 months has further stretched valuations, weighing on forward-looking returns,” as stated in the meeting materials.

In the first quarter of the year, the system committed $585m to new private equity investments.

The system leaned towards supporting growing, high margin business within the industrial sector, Sterling Group Partners VI and Inflexion Partnership Capital Fund III for a large part of the allocation, alongside a customized multi-strategy fund Audax Private Equity/Strategic Capital–SW.

WRS’s core trust fund’s allocation to private equity/debt was 19.4%, as of March 31.