Pennsylvania Boosts Private Equity Investments

Mar 16 2007 | 12:59pm ET

The $32.1 billion Pennsylvania State Employees Retirement System’s board has approved investments in four alternative investment funds. The system will commit up to $40 million to Insight Venture Partners VI, up to $40 million to OCM Opportunities VII; up to $40 million to OCM Opportunities VIIb, and up to $60 million in a follow-on investment in the Avenue Special Situations Fund V.

In addition, the system will also invest up to $25 million in the AG Asia Realty Fund and an unspecified amount in an inflation-protected mandate with Blackstone Alternative Asset Management. The investments will be funded from cash as part of SERS’ long-term investment plan. 

SERS last year earned 16.4% on its overall investments, thanks in part to private equity, which netted it a 23.2% return. Also contributing to the system’s overall strong performance was its portable alpha strategy, according to CIO Peter Gilbert. As applied in the large-cap domestic stock segment of the portfolio, in 2006 portable alpha boosted returns by 5.4% points above the Standard & Poor’s 500 Index, which returned 15.7%.

“In the five years since its inception, our portable alpha/fund of hedge funds strategy has now added more than $1 billion in above-market returns, without materially increasing risk,” Gilbert said.

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