Texas ERS, OMERS open up new frontiers in Asian private markets

The US and Canadian pension funds have shifted to Asia for better returns and relationships.

Two North American pension funds have shifted their investment targets to Asia and are seeking competitive returns and long-standing relationships with investment partners, according to their chief executives, speaking at the Milken Institute 2018 Asia Summit held in Singapore last Thursday.

Tom Tull, chief investment officer at the Employees Retirement System of Texas, the investment division of the state’s retirement board, said that the pension fund has been investing in emerging Asia for better returns regardless of the cyclicality of public markets.

“We are believers in alternatives without a doubt,” said Tull, adding that his organisation continues to see liquidity dry-outs in public markets.

On the private equity side, the pension fund is looking for secondaries transactions this year with a view to mitigating J-curve effects and obtaining stable returns from quality assets.

Tull also disclosed that the fund recently gained exposure to infrastructure assets, including call centres, in India and the Philippines. “Because we can get better returns than what we can get from the US financial markets,” he added.

More global asset allocators are focusing on building sustainable relationships with investment partners via direct investments and bilateral negotiations.

“Because you cannot do it [build up relationships] by flying in and flying out,” said Michael Rolland, a Singapore-based president and chief operating officer for Asia-Pacific at the Ontario Municipal Employees Retirement System.

Rolland told sister publication PDI: “We just opened our Singapore office, give us some time to establish the team and we will see it from there,” adding that the reason the office is there is to build direct relationships with asset allocators and investment managers around the world.

OMERS managed $95 billion in net assets as at 31 December 2017. It allocated 42 percent of its total assets to alternative investments including private equity and real assets and 18 percent to a credit strategy, according to its 2017 annual report published on 23 February.