The Teacher Retirement System of Texas may become the latest large public pension fund to boost its private equity allocation.
The $124 billion pension fund wrapped up a strategic asset allocation review and plans to review the findings Thursday, among which calls for a 5% increase to illiquid investments, including private equity, according to meeting materials on its website.
A Texas Teachers spokesman said trustees will review the proposal at tomorrow’s meeting before making a formal recommendation at a later date.
The proposal calls for a 2% increase in its private equity allocation and a 3% jump for real assets due to the market’s robust health. If approved, the increase would be phased in over time, the materials said.
Texas Teachers, which backs managers such as Apollo Global Management, Kohlberg Kravis Robets & Co. and Blackstone Group , currently has an 11% allocation to private equity.
Last year the pension fund saw distributions exceed contributions by $1.4 billion. A similar phenomenon happening at pension funds across the U.S. The wave of realizations has put pension funds in a difficult position of either maintaining current allocations, increasing them or lowering those hurdles to avoid a risk of overexposure to the asset class.
Even maintaining an allocation target would likely mean a greater investment pace for many pension funds.
For more on the latest investments made by North Carolina Department of State Treasurer, Arkansas Teacher Retirement System, Houston Municipal Employees’ Pension System and others, check out LBO Wire.