With a high-flying 2021 in the rearview mirror for private markets, a new study is looking back at the asset class’s most active allocators — and their favorite managers.
The California Public Employees’ Retirement System committed the most capital to private markets among pension funds in 2021, according to the study, which was conducted by Alternatives Watch Research and commissioned by alternative investment technology provider Vidrio Financial.
The report also identified the private equity manager that was most popular among pension funds: Hellman & Friedman, which garnered commitments from ten public funds.
In total, the amount of new capital commitments to alternatives in 2021 exceeded that of 2020 by $30 billion, according to the report. Expected to be released Tuesday, the report tracked $130 billion in new capital commitments across more than 900 institutional investor mandates from 50 of the top allocators to alternatives.
As the top private equity firm, Hellman & Friedman raised $24 billion and committed $1.8 billion to itself via a general partner commitment. Pensions including CalPERS and Massachusetts Pension Reserves Investment Management Board invested in the fund.
Ares Management reigned supreme among credit managers, closing $9 billion in U.S. direct lending commitments, a $2 billion secured lending fund in Asia, and a $5 billion close of its second private credit solutions fund. South Carolina’s Retirement System, the Virginia Retirement System, and CalPERS were among the investors.
Brookfield Asset Management topped the real estate and infrastructure rankings after raising its fourth flagship real estate fund and its first global transition fund, for a total of $12 billion. The Maryland State Retirement and Pension System, Texas TRS, and New York State Common Retirement Fund ranked among the allocators.
Meanwhile, CalPERS earned the title of the largest allocator after committing a total of $17.3 billion to private markets. Adding capital to private markets has been a top priority for the $469.23 billion pension in recent years.
In November, as a part of a larger strategic asset allocation plan, CalPERS said it would increase its private equity portfolio from 8 percent to 13 percent of total assets — an increase of roughly $25 billion. The fund began selling stocks and Treasuries to fund the private markets push, Institutional Investor previously reported.
The Canadian Pension Plan Investment Board ranked second in total private markets allocations, having put $14 billion to work in 2021, according to the report. The fund ranked fourth in private equity commitments, with $3.8 billion; second in credit mandates, with $2.7 billion; and first in real estate and infrastructure investing, with $6.1 billion.
New York State Common Retirement Fund ranked third overall, with $8.1 billion allocated to private markets in 2021. Connecticut Retirement and Pension Trust Funds ranked fourth with $7.2 billion, and the Florida State Board of Administration ranked fifth with $6.3 billion. They were followed by the Illinois Teachers’ Retirement System ($6.2 billion), Texas Teachers’ Retirement System ($6.2 billion as of August 31, 2021), Washington State Investment Board ($5.7 billion), New Jersey Division of Investment ($5.1 billion), and Oregon Investment Council ($4.8 billion).
Although these allocators deployed record capital to managers in 2021, the frenetic pace isn’t likely to continue.
“Investors are not expecting 2022 to yield the same returns as 2021, as investment staffs cautioned trustees in year-end reports that the double-digit figures that easily surpassed benchmarks were not sustainable,” Mazen Jabban, chairman and CEO at Vidrio Financial, said in a statement.
In his view, allocators will not only continue to move away from the traditional 60-40 model but will also focus on a more equal mix of public and private investments.
“Now with inflation likely to not be transitory, macroeconomic uncertainty and the specter of further interest rate hikes on the horizon, allocators are making key shifts in their portfolios,” Jabban said.