The $44B Texas Municipal Retirement System has increased its target allocation to private equity, raising it to as much as 28% from the current 20%, according to recent meeting materials.
During the meeting, TMRS’ chief investment officer, Yup Kim, said the pension fund is prioritizing co-investment opportunities and evaluating opportunistic secondary transactions. The move aims to improve portfolio balance, capitalize on a favorable pricing environment, and enhance performance through reducing tail-end or underperforming exposures.
As of June 30, 2025, TMRS had allocated 14.5% of its portfolio to private equity, the approved range now spans 12% to 28%. Within private credit, the pension plan has raised its range to between 13% to 29% and its range for real assets to between 13% to 26%.
In the second quarter of 2025, TMRS approved $2.5B in new market investments across 11 funds and 14 co-investments. Co-investments now account for 9% of the total private markets net asset value, up from 5% at the start of 2024.
The CIO noted co-investments carry low or zero management and carried interest fees, adding that they could potentially provide $25B in value-add over the next decade.
Year to date through May 2025, the pension plan committed $2.12M to BCIS El Dorado Investors and $50M to Biospring Partners Fund II.
TMRS also disclosed a total of $370M in new commitments and $582M in co-investment activity over the same period, within its private equity portfolio. Within real assets, TMRS allocated $400M to fund commitments and $430M to co-investments. And for its private credit portfolio, the pension plan allocated $905M to co-investment activities and $375M to fund commitment.
The broader private equity overhaul follows Kim’s appointment as CIO in 2024. Alongside the new asset allocation policy, he has reshaped the leadership team.
Recent hires include Yuri Lee as director of venture capital and Annika Kim as director of special situations and office of the CIO. Amol Deshpande joined as head of direct investments from Redesign Health, while Philip O’Brien came aboard as head of private equity from La Caisse de dépôt et placement du Québec, both in the second half of August. Additional appointments include Isidora Stankovic as director in the private equity and direct investments team, and Hester Cai as portfolio manager within private credit.
Over one- and five-year periods, the pension plan returned10.79% and 9.10%, exceeding the benchmark of 9.35% and 7.13%, as of June 30 2025.
As of June 30, 2025, private equity returned 9.94%, outperforming the one-year benchmark of 5.59%. Private credit also outperformed its one-year benchmark (7.93% vs 7.45%). Similarly, real assets reported a one-year return of 6.13% outperforming its benchmark of 3.30%.
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