The Employees Retirement System of Texas (ERS) will not invest in private infrastructure for the time being due to a market environment characterised by “too few good deals”, ERS chief investment officer Tom Tull told the Board of Trustees at a meeting on Tuesday.
“Based on the market environment right now – there’s just too many going after too few good deals,” he said, adding that given current conditions it was not worth the risk.
This decision, however, is temporary and does not affect the 4 percent ERS allocated to infrastructure last August.
“We’re hoping within the next 12-18 months the market will right itself,” Tull said in response to how long this ‘freeze’ will last.
“Some people will get burnt and then we will step in,” he said.
Of the 4 percent total allocated to the asset class, 1 percent is set aside for public infrastructure, which the pension fund will continue to invest in while holding off on the remaining 3 percent earmarked for real assets.
As of August 2013, ERS had invested 0.7 percent of its $24 billion portfolio in infrastructure. That includes a $150 million co-investment alongside US energy-focused fund manager Panda Power Funds.
The lion’s share of investment is currently in global equity and fixed income, representing 53.6 percent and 29.5 percent of ERS’s total assets, respectively.
However, the pension fund’s long-term goal is to decrease the global equity allocation to 45 percent and fixed income to 25 percent.
Established in 1947 and headquartered in Austin, the Employees Retirement System of Texas is a public pension fund providing retirement and other benefit programmes to state employees, retirees and their dependents in the state of Texas.