This content is from: Portfolio

$79B Georgia Pension Allowed to Invest in Alternatives for First Time

The state senate passed a bill on Tuesday that will let the Teachers Retirement System of Georgia meet a targeted 5 percent allocation to alternatives.

The Teachers Retirement System of Georgia has been given the go-ahead by state legislators to invest in alternatives.  

The retirement system, which had a total of $78.89 billion under management as of June 30, 2019, has been investing only in equities and fixed income up to this point, a rarity in the world of U.S. public pension funds.  

That can change now, however, because the Georgia State Senate passed a bill Tuesday that will allow the retirement system to invest in alternatives.  

State Senator Ellis Black, who chairs the retirement committee and was the lead sponsor of the bill, did not return a phone call Wednesday seeking comment. Georgia TRS could not be reached by phone for comment on Wednesday.  

According to the retirement system’s annual report for the year ending June 30, 2019, TRS was investing 70.2 percent of its assets in equities, with the remaining 29.8 percent in fixed income.

The financial report showed that the retirement system had a target allocation to alternatives of 5 percent of assets under management. TRS would reduce its allocation to equities in order to invest in alternatives, according to the report.

[II Deep Dive: Pensions Love Alternative Investments More Than Ever

Public pension funds have been steadily increasing their allocations to alternatives in search of diversification and better risk-adjusted returns. A recently published report from Willis Towers Watson’s Thinking Ahead Institute showed that among global pension funds, allocations to real estate, private equity, and infrastructure grew from about 6 percent to nearly 23 percent over the last 20 years.

In addition, CIBC Mellon’s May 2019 survey of 50 Canadian pension funds, insurance companies, endowments, foundations, and fund managers found that 58 percent of respondents planned to increase their allocations to alternative assets.

In the U.S., pension funds shifting money into alternatives include the the California Public Employees’ Retirement System, which said in November 2019 that it planned to step up its private equity investments to stay on track for its target asset allocation. Its peer, the California State Teachers’ Retirement System, is similarly planning to cut its allocation to public markets in favor of private equity investments.

Related Content